Every spending situation is unique. SingSaver assembles the ‘Best For‘ list, so you can decide what’s best for you.
Ever since banks started reducing their deposit interest rates, we’ve started seeing a slew of non-traditional alternatives to savings accounts.
Some popular ones you might have heard of are the Singlife Account, Dash EasyEarn, Etiqa Elastiq (now replaced by GIGANTIQ), and Stashaway Simple.
Offered by non-bank financial institutions such as insurers and stock brokers, these alternative accounts supposedly let you earn higher interest rates than your traditional savings account, while not compromising on the liquidity of your funds.
In this article, we’ll walk you through the differences between savings accounts and these new alternatives, while comparing the options on the market.
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What exactly are these alternatives?
As mentioned above, products such as Singlife Account and Stashaway Simple are not bank accounts. They are cash accounts maintained by different types of financial institutions (FIs) such as:
- Insurance providers
- Investment brokerages
- Robo advisors
Why do we care? Because these FIs are governed under different rules by the Monetary Authority of Singapore compared to banks.
Banks are more strictly regulated, and the cash you deposit in a bank account is insured by the Singapore Deposit Insurance Corporation (SDIC). That makes regular bank savings accounts practically risk-free.
Insurers, brokerages and robo advisors are not held to the same level of accountability as banks, so there’s a higher level of risk.
When you park your cash in a non-traditional ‘savings account’, the returns may not be guaranteed. In some cases, even your capital is not guaranteed, meaning that you may lose the initial amount you put in.
Alternatively, your returns may be guaranteed, but there are certain conditions (e.g. lock-in period, minimum balance) to meet.
We’re not saying that these accounts are too good to be true. However, it’s important to know the difference before you commit.
Comparison of alternative ‘savings accounts’
There are almost too many of such accounts to keep track of, so we decided to compile the more popular ones in a handy table. Apart from the interest rate, we also categorised them by FI type and whether your cash is insured under the SDIC.
|Alternative ‘savings account’||Advertised interest rate*||Category||Deposit insured?|
|Singtel Dash EasyEarn||1.8%||Insurer||Yes|
|Singapura Finance ViVid||1.3%||Finance company||Yes|
|Endowus Cash Smart||0.7% to 2.1%||Robo advisor||No|
|Stashaway Simple||1.2%||Robo advisor||No|
|MoneyOwl WiseSaver||Varies; now 0.42%||Robo advisor||No|
|POEMS Excess Funds Management||Varies; now 0.1224%||Stock broker||No|
|FSMOne Auto-Sweep||Varies; now 0.587%||Stock broker||No|
*Valid as of September 2021. Interest rates are subject to changes.
If you are looking for something super-low-risk, we recommend you only consider the first few options which are covered by the SDIC. The SDIC covers only banking institutions and insurance providers.
Investment broker and robo advisor accounts, on the other hand, are not insured, so they are better for those with slightly higher risk appetites.
Accounts insured under SDIC
The following cash accounts are provided by insurers and they are technically insurance policies. Your capital (the original deposit) is guaranteed; even if anything should happen to the provider, it is still insured under the SDIC’s Policy Owners’ Protection Scheme.
|Insurance savings plan||Advertised interest rate||Minimum deposit amount||Maximum deposit amount|
|Singlife Account||1% (not fully guaranteed)||S$500||S$10,000|
|Singtel Dash EasyEarn||1.8% (1.5% guaranteed + 0.3% non-guaranteed) for first year only||S$2,000||S$20,000|
|Etiqa GIGANTIQ||1.8% (guaranteed) for the first year||S$50||S$10,000|
Finally, there’s also an alternative savings account by local financial services company Singapura Finance. It’s under the SDIC Deposit Insurance Scheme, so your capital is protected up to S$75,000.
|Savings account||Advertised interest rate||Minimum deposit amount||Maximum deposit amount|
|Singapura Finance ViVid||1.05% for account balances between S$0 and S$10,000 |
1.3% for account balances between S$10,000 and S$20,000
0.25% for account balances above S$20,000
|S$500 for initial deposit (thereafter, maintain minimum account balance of S$200)||No maximum deposit amount|
Verdict: Cash management accounts have not been immune to interest rate cuts either, with several products revising their rates through 2020 and 2021.
Both Singtel Dash EasyEarn or Etiqa’s GIGANTIQ feature a maximum projected interest rate of 1.8% p.a. and each has their own pros and cons. For example, the GIGANTIQ account’s 1.8% interest rate is valid only up to the first S$10,000 deposited. On the other hand, Singtel Dash EasyEarn allows you to generate 1.8% p.a. on your first S$20,000.
The next few options are cash management accounts by robo advisors and investment brokerages, meaning they take your cash and ‘manage’ (invest) it for you.
The providers choose relatively low-risk investments for these accounts to preserve your capital, but as with any investment, there is no capital guarantee. Remember, you do not have the safety net of SDIC protection.
The ‘interest rate’ really depends on how well those underlying funds do, so let’s take a quick look at the underlying funds for each account:
|Cash management account||Projected return||Underlying fund(s)|
|Stashaway Simple||1.2%||50% LionGlobal SGD Money Market Fund |
50% LionGlobal SGD Enhanced Liquidity
|Endowus Cash Smart (Core)||0.7% to 0.8%||50% Fullerton SGD Cash Fund |
50% LionGlobal SGD Enhanced Liquidity
|Endowus Cash Smart (Enhanced)||1.1% to 1.3%||50% UOB United SGD Fund |
50% LionGlobal SGD Enhanced Liquidity
|Endowus Cash Smart (Ultra)||1.9% to 2.1%||27.5% LionGlobal SGD Enhanced Liquidity Fund |
25% Fullerton Short Term Interest Rate Fund
25% LionGlobal Short Duration Fund
12.5% Nikko Shenton Income Fund
10% PIMCO Low Duration Income Fund
|MoneyOwl WiseSaver||Varies; now 0.42%||Fullerton SGD Cash Fund|
|POEMS Excess Funds Management||Varies; now 0.1224%||Phillip Money Market Fund|
|FSMOne Auto-Sweep Account||Varies; now 0.587%||25% Fullerton SGD Cash Fund |
55% LionGlobal SGD Enhanced Liquidity Fund
Verdict: Without diving deep into prospectuses, it is difficult to say for sure which underlying funds/accounts are the best. However, it appears that Endowus has the most flexibility out of all the providers listed along with the highest interest rates.
The robo-advisor has three cash management accounts in its portfolio, with varying interest rates and underlying funds. Contrast this with other robo-advisors in the market, who have just one cash management account under their belt.
Although Endowus has the highest projected interest rates out of all the providers listed here, you might want to stick with your current robo-advisor or online brokerage’s solution for convenience’s sake. After all, the sum of cash that you’re setting aside will be used in the near future, whether for a large downpayment or lump-sum investment.
Are these good alternatives to savings accounts?
If you learn one thing from this article, it’s that these accounts cannot be compared apple-to-apple against bank accounts. They are different financial products, and you must either take on more risk or accept more limitations if you are to switch your account.
While their returns may be attractive compared to the current savings accounts interest rates, you should do your due diligence and understand what you are going into.
Unlike true bank accounts, these ‘savings accounts’ do not come with the banking facilities or ATM network we take for granted. Although you can typically perform bank transfers/withdrawals, this might take up to days to process. So it’s best to keep a sensible amount of cash in your savings account still.
All that said, these accounts are a relatively low-risk way of growing your spare cash, especially if you do not have the stomach for investments. When in doubt, err on the side of caution, and select those insured under SDIC for greater peace of mind.
Read these next:
Insurance Savings Plans: Singlife Account vs GIGANTIQ vs SingTel Dash EasyEarn
Best Short & Long Term Endowment Plans in Singapore (2021)
Best Savings Accounts in Singapore to Park Your Money (2021)
Regular Savings Plan (RSP): What They Are And The Best Ones To Invest In
Fixed Deposit vs Singapore Savings Bond (SSB) vs Savings Account: Where To Put Your Money?