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Finance

What Are The Advantages of Maintaining a Regular Savings Plan in Singapore

October 18, 2022 by Charles Leave a Comment

A regular savings plan is an account where you can deposit a fixed sum of money every month. The money saved can be used for different purposes, such as buying a property or funding your retirement. There are many advantages of maintaining a regular savings plan in Singapore.

Regular savings plans offer flexible payment options

You can make monthly, quarterly or yearly payments into your regular savings plan. This flexibility allows you to save according to your financial situation and goals.

Regular savings plans offer attractive interest rates

The interest rates on regular savings plans are usually higher than those on ordinary savings accounts, making regular savings plans a more attractive option for those looking to grow their money.

Regular savings plans offer tax relief

Under the Singapore Income Tax Act, you can enjoy up to SGD7,000 tax relief annually on your regular savings plan contributions. Therefore, you will pay less tax on your income, allowing you to keep more of your money.

Regular savings plans help you save regularly

One of the main advantages of regular savings plans is that they help you develop a habit of saving regularly. By making fixed monthly contributions to your regular savings plan, you will get into the habit of setting aside money every month. This habit can be beneficial in the long run as it can help you to grow your savings.

Regular savings plans offer liquidity

Regular savings plans offer liquidity, which means you can withdraw your money at any time, which is helpful if you need access to your money for unexpected expenses.

Regular savings plans are easy to set up

Regular savings plans are easy to set up, and no minimum amount is required to open an account, making them a convenient option for those who want to start saving but do not have much money to put into their account.

Regular savings plans are safe

Regular savings plans are a safe way to save your money as they are backed by the Singapore Deposit Insurance Corporation (SDIC). Your deposits are protected for up to SGD50,000 if the bank fails.

Regular savings plans can help you reach your financial goals

Regular savings plans can help you reach your financial goals by allowing you to grow your money over time. With interest earned on your account, you can reach your goals sooner than if you had not been saving regularly.

Disadvantages of regular savings plans

Regular savings plans have a minimum amount required

Most regular savings plans require you to make a minimum monthly contribution, which can be a disadvantage if you do not have much money to put into your account.

Regular savings plans have fixed terms

Another disadvantage of regular savings plans is that they have fixed terms, meaning you cannot withdraw your money until the term is up. It can be problematic if you need access to your funds for unexpected expenses.

Regular savings plans may have penalties for early withdrawal

Some regular savings plans may charge penalties for early withdrawal, which can be costly if you need to access your money before the end of the term.

Regular savings plans may have high minimum balances

Some regular savings plans require you to maintain a high minimum balance, which can be a disadvantage if you do not have much money to put into your account.

Regular savings plans may have limited investment options

Regular savings plans usually have limited investment options, which can be a disadvantage if you want more flexibility in your investment choices.

Where can you open a regular savings plan in Singapore?

At certain banks in Singapore

You can open a regular savings plan at certain banks in Singapore, such as DBS, OCBC, and UOB.

With an insurance company

You can also open a regular savings plan with an insurance company, which is a good option if you want more flexibility in your investment choices.

Online

Many online platforms offer regular savings plans, a convenient option for those who want to start saving but do not have much money to put into their account.

To read more on topics like this, check out the Finance category

Filed Under: Finance

Borrower Risk Profiles | What Category Are You In?

September 24, 2021 by Charles Leave a Comment

When you use credit, you start building a credit profile and a sense of creditworthiness. But what you may not know is that your credit, spending, and debt habits follow you in the form of a risk profile.

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This risk profile lets future lenders know whether or not to approve you for more credit or loans. Additionally, your credit score category informs these decisions. Read on to learn more about:

  • The 6 borrower risk profiles
  • Credit score categories
  • Where you fall in this hierarchy

What Is a Risk Profile?

This “risk profile” is essentially like a report card for how well you’ve managed your debt, finances, and credit lines over time. Most people fall into one of the six different risk profiles, depending on what type of debt they have accrued (if any at all).

Since there are various types of credit you can use in the US, there are various types of profiles you may match—read more from Forbes.

When you go to a lender in the future—whether it’s applying for a loan, new credit card, payment plan for a couch, or some other line of credit—they will examine your “risk profile” along with your credit history.

Note: risk profiles aren’t the same as your credit score, but they do influence your credit score. 

For example, if you have a risk profile of auto and mortgage debt, then you have multiple forms of debt. This scenario would likely mean you have a lower credit score and fall into one of the subprime credit score ranges.

Below, we’ll take a look at the six different risk profiles of borrowers. But, first, let’s take a look at these different credit score ranges.

What Are Credit Score Ranges?

You may have heard that lenders look at your creditworthiness to determine whether they will approve you for credit.

Well, creditworthiness is essentially how well your record shows that you can pay off debt, or better yet, avoid accruing it in the first place. Each person with credit will fall into one of the following credit score ranges over time.

Deep Subprime | Below 580

This is the lowest credit score range a borrower can fall into. When you apply for new credit or loans, you are not likely to get approved with scores in this range (below 580).

This is where most people start when they have just opened their first line of credit. At this stage, the only credit you can get approved for is secure forms, like secured credit cards and loans.

Subprime | 580 – 619

Subprime, as the name suggests, means your credit score is below the prime. Scores between 580 and 619 characterize this score range.

https://www.cnbc.com/select/what-is-subprime-credit/

Near-Prime | 620 – 659

Near-prime scores are one step closer to a prime credit score, but they still fall short. These scores range between 620 and 659. You can still get approved for some credit in these cases, but not as often. Near-prime is fair or average credit.

Prime | 660 – 719

Prime credit scores fall between 660 and 719. This is a good credit range to be in, and you can actually still achieve a lot without needing a super-prime score.

You can get approved for most cards and loans with decent rewards and benefits if you have a prime credit score. Having a higher score like this also enables you to move from secured to unsecured cards and loans.

Super-Prime | 720 or Greater

A super-prime credit score is the best you can have. With a credit score of 720 or higher, these types of people can achieve luxury perks, low interest rates, and more with their excellent credit.

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The Six Risk Profiles

Each borrower (a person who uses credit) has a different risk profile. Your risk profile identifies the types of debt you currently have or have had.

Some people have a risk profile of no debt, while others accrue debt in various categories, such as credit cards and loans combined.

Mortgage-Only Consumer

Mortgages – otherwise known as home loans – are a unique line of credit that is specifically for paying off a house over years. If your borrower risk profile is mortgage-only, this means that you currently only have debt in the area of a home loan.

While this is a single category of debt, note that it often takes various forms of previous credit to qualify for home loans. This means that most mortgage-only consumers have accrued other types of debt in the past and so their credit score probably reflects that.

Credit Card-Only Consumer

This risk profile is pretty straightforward. You have this risk profile to show for yourself if you only currently have debt in the area of credit cards. Some people only hold one line of credit as a credit card, while others keep many credit cards to expand and improve their credit score over time.

While this limits debts to one area of credit, there is still a possibility that these types of borrowers have a lot of debt unpaid and therefore, a subprime or deep subprime credit score to show for themselves.

But it all depends on how quickly you make payments and whether or not you carry a balance on your card(s). If you carry a balance at any given time, credit bureaus will view that as “debt”, but most individuals don’t consider themselves in debt between payments if they always pay in full.

Auto Loan-Only Consumer

Auto loans are another form of credit that contributes to a consumer’s risk profile. If you have a car you are paying off, or multiple cars you are paying off, then you are essentially in debt to whichever credit lender has approved you.

It’s far less common to only have this type of debt to show for yourself, since most people have to have established some form of credit, like with a credit card or two, before getting approved for an auto loan.

Student Loan-Only Consumer

While student loan debt is one of the most common types of debt among borrowers, it is not very common for borrowers to have this risk profile.

Here’s why: lenders give out student loans and approve them far more easily than other forms of credit since they give them to students, who are typically young people with no other way of establishing credit.

Student loan payments often carry on for years or even decades after a student graduates, which means it’s very likely that the borrower will have accrued other forms of debt since then.

It would be much more likely for a borrower to have a risk profile that includes other forms of debt in addition to student loan debt.

Auto Loan + Mortgage Consumer

Auto loan + mortgage is one of the most common categories of loans among consumers. The reason is pretty straightforward; shelter and transportation are extremely important in America, where most people have a house and at least one automobile.

This risk profile may aid your credit score, as it helps you have multiple files to report to credit bureaus and potentially boost your score. On the other hand, though, this scenario may lower your credit score if you can’t get your debt under control and make payments on time and in full.

No Debt Consumer

Does it surprise you to hear that the “no debt” consumer is the most common type of risk profile there is? While many people are in debt in some way, people with no debt encompass people who also don’t have any lines of credit.

It’s extremely important in the United States to establish and build lines of credit to form a credit score and increase it. While it may seem like this is a risk profile that puts one at an advantage for credit score, this is not the case in all scenarios.

Some people have “no debt” because they have closed all lines of existing credit and paid them off. While this may seem enticing, keeping old credit lines open even after you pay the debt allows individuals to continue to maintain and grow their credit score. So the “no debt” profile doesn’t always equate to a prime or above prime credit score.

Conclusion

An individual’s credit risk profile influences the type of credit score category they fall into over time.

The way that risk profiles affect credit score categories will vary and don’t always correspond exactly. Sometimes, having more lines of credit (forms of debt) can actually help one’s credit score to increase if managed well and on time.

On the other hand, having only one form of debt may help a person’s credit score by minimizing debts before they get out of hand.

To read more on topics like this, check out the Finance category

Filed Under: Finance

How to Save Money on Back-to-School Shopping

September 26, 2020 by Charles Leave a Comment

Families in the U.S. spend a significant amount every year on back-to-school supplies. It can be expensive to shop for stationery, textbooks, and accessories. And children often need a new wardrobe, too. However, there are several different ways to save money on this yearly expense.

You can check stores for discounts and coupons, or shop for refurbished or used items. Try making the most of refunds, free shipping, and limited warranty options. Moreover, don’t forget to plan and budget to cut out the possibility of any additional financial issues. If you’re trying to save but don’t know how to start, follow these tricks and tips.

Do your homework.

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Before you buy the items you need, do your research. What stores offer the best discounts and warranties, and where will you save the most money? Check the school website and make a list of stores where you can use student discounts. An excellent way to save on back-to-school shopping—especially on outfits for the new school year—is to shop online.

Websites and applications often list clothing items at a lower price than retail stores. Also, make smart choices when you buy clothing. Consider fabric that lasts longer or a piece of clothing with a reversible option. With reversible women’s clothing, you can have two skirts for the price of one. It will help you save money without compromising your desire to wear a variety of different outfits.

Buy used or refurbished items.

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You may need to spend on tablets, laptops, or a smartphone for the new school year. Combined with internet and data rates, it can add up to a significant amount of money. So, instead of buying full-price items at fancy stores, consider buying used or refurbished items.

Do you (or your kid) really need a new device? Or can you can get the same one at a discount if it’s a used item? You can get an iPhone, a laptop, or a tablet like an iPad at a used electronics store. Also, consider refurbished items that are sometimes a better option than used ones. Several online retailers offer refurbished cell phone deals, free shipping, and warranty options.

Get on a budget.

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The best way to save on shopping for the school year is to plan everything properly. Make a list of the different things you need, and set a budget for each one. Does your child need a new backpack in addition to school textbooks? What about a new wardrobe for the start of a new year? Set a strict budget for each item so that any additional cost issues don’t hit you during your shopping trips.

 

Sign up for store emails.

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It’s not easy to find the best prices for school items. An easy way to do this is to sign up for store emails. Most retail stores have back-to-school sales that offer discounts on a variety of products. Online stores sometimes have flash sales where products are cheaper for a few hours. Keep track so you can make the most of these deals and offers.

Shop at clearance stores.

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From a new cardigan to a school backpack, you can find the best deals for everything at clearance stores. Visit a dollar store to find affordable accessories and garments. Keep track of clearance sales at your favorite store or make the most of final sale purchases.

Don’t forget to use coupons.

You can add discount extensions to your browser to inform you of more significant savings on an outfit or accessory you’re looking at online. Check money-saving websites to see if you’re shopping at the right stores. Also, look for coupons and promotional offers in your local newspaper. You can get the best deal of full-price items if you start your shopping before the school term.

To read more on topics like this, check out the Finance category

Filed Under: Finance

What Are You Really Paying for at College

September 12, 2020 by Charles Leave a Comment

It’s no secret that college tuition has increased dramatically over the last few decades. People today pay far more for both public and private college than they did only a few decades ago, even accounting for inflation. However, even with the more public attention on college costs, it’s common for people not to really know what their money goes toward. When you pay for college, what does your tuition actually pay for? Here’s what you’ve been looking for.

What Does Your College Tuition Actually Pay For?

The Breakdown Per $100

Although colleges don’t usually give this information to students directly, they do still report it to the United States Department of Education. The Department of Education then makes that information public so people can analyze it and understand a little bit more about how these colleges work.

When you start to look through this information, you’ll be able to get a better understanding of the way this money works out. Here’s the breakdown in terms of how much colleges spend per $100.

For every $100 in tuition, on average $61.46 goes to expenses that more traditionally correspond to educational services. This is the breakdown of that $61.46:

$15.81 – Salaries
$11.47 – General Instruction Expenses
$9.61 – Auxiliary Student Enterprises
$8.26 – Academic Support
$8.15 – Institutional Support
$4.75 – Student Services
$3.41 – Grants and Financial Aid

This means, then, that on average $38.54 of every $100 goes toward elements of the collegiate experience that don’t necessarily contribute directly to college expenses. Here’s the breakdown of that number:

$15.58 – Hospitals and Healthcare
$11.66 – Research
$6.25 – Other, Including Taxes and Liabilities
$4.52 – Public Services
$0.53 – Independent Operations

Differences in Costs Between Private and Public Colleges

As you probably already knew, public and private colleges have vastly different prices. The College Board reported that for a full-time student to attend an in-state public school, it costs on average $21,950, room and board included. The same arrangement for a private college, however, is $49,870 on average.

You can see this reflected in the way the tuition costs break down. At a public college, about $5,987.96 of your overall tuition will go to salaries. At a private school, that figure nearly triples to $15,315.08. The differences are starkest in salaries, healthcare costs, institutional support, and research.

Tuition As Part of Operating Costs

Another interesting element of tuition has to do with the percentage of a budget that tuition makes up at a college. Colleges typically can’t cover all their expenses through tuition; public colleges usually get additional government grants, while private colleges often have endowments.

In 2000, on average, public higher education establishments covered around 29.2% of their costs with tuition. However, in 2018, tuition had increased by more than 25% and public higher education establishments covered on average around 46.6% of their costs with it.

Conclusion

There are a lot of interesting things to learn about how college works in the United States from this information. With more and more people campaigning for reduced tuition and many students openly expressing frustration at the situation, it could be that people are interested in changing things up. Maybe sometime within the next few years, college will be more affordable and available for everyone.

To read more on topics like this, check out the Finance category

Filed Under: Finance

What Are the Pros and Cons for Securing an Unsecured Debt

December 5, 2019 by Charles Leave a Comment

Person Holding Debit Card

Every business needs an external cash injection at some point in time. This could be in the form of a traditional term loan, unsecured business funding or any other kind of loan.

In some instances, a business may use collateral in order to obtain a loan. If the business defaults on loan repayment, the lender confiscates the collateral.

On the contrary, an unsecured business loan does not require collateral, which means that it poses a lower level of risk to the borrower.

The pros and cons of securing an unsecured debt are discussed in the article below:

Pros of unsecured debt

No Requirement of Collateral

There are many businesses that do not possess something of value that can be used as collateral rendering them ineligible to secure financing.

Unsecured loans do not require you to put up collateral of value. Rather, they will be content with your future projections, and business plans. If the lender deems them good enough, he will approve your loan.

When you are not putting up collateral, the lender may ask for some other kind of surety like a personal guarantee.

Time-Saving

Business loan applications take quite a lot of time to get approved because the lender is following an SOP that requires it to review each and every aspect of the business. It applies to both secured and unsecured financing.

However, in case of a secured loan, the lender must spend additional time in surveying the collateral and obtaining its value. On the contrary, when you are seeking an unsecured loan, you will save this time.

No-Risk Posed to Your Assets

For a secured loan, you are required to put up specific assets. It could be the office building or your production equipment. In case of default, the lender will take control of this asset.

There is no such condition with an unsecured loan and they pose no threat to your assets.

Cons of unsecured debt

Higher Rate of Interest

An unsecured business loan is riskier from the point of view of the lender because he does not have an asset as a backup if you fail to repay the loan.

In order to cover this higher risk, the lender may charge more interest from you.

Not Easy to Qualify

When there is no collateral involved in the transaction, the lender may scrutinize your business more thoroughly. It would review your financial statements, tax returns, credit score, and projections. If the lender is able to find a gap in any of these areas, it is most likely to decline your application.

The Final Word

A business in need of working capital in the form of an unsecured loan must take stock of its present financial condition.

In many cases, an unsecured loan will look the most suitable option because of many reasons, some of which are listed above.

However, it is up to the business owner to analyze what is best for his business in the long run, and then act accordingly.

To read more on topics like this, check out the finance category.

Filed Under: Finance

How To Organize Your Finances

September 23, 2019 by Charles Leave a Comment

If you’re a little disorganized when it comes to managing your finances and your monthly budget, simply continue reading to discover a handy guide to organizing your finances.

How to organize your finances:

List all of your debt out on a piece of paper:

While you may want to temporarily forget about your debts in order to take control of your finances, it’s crucial to account for all of your debt. Make sure to list the interest rate for each loan or credit card, so that you’ll be able to start paying off your loans and credit cards which have the highest interest rates. As the faster you pay these debts off, the less interest you’ll pay in the long term.

Consider consolidating all of your loans and credit card debt into a single loan:

By consolidating all of your loans and credit card debt into a single loan, you’ll be able to pay a lower amount of interest. As an added bonus, you should find it a lot easier to keep track of your debt if you choose to consolidate all your loans into a single loan. Lastly, you may even find that you’re more motivated to pay off your loan, if you only have a single loan to pay off. As paying off one loan, no matter how big may seem more manageable than paying off two credit cards and three loans.

Use a budgeting app in order to manage all of your receipts:

If you’re terrible at safely storing printed receipts, you can keep track of your everyday spending by taking photos of all of your printed receipts and uploading them to a modern budgeting app. That will automatically add up all of your in store purchases. Most budgeting apps will also allow you to add your online spending to your monthly expenditure. So that you’ll be able to keep track of your online purchases and bills and in store purchases in one place.

Set up an automatic payment from your everyday account to your long term savings:

In order to force yourself to save a predetermined percentage of your salary or wages, it’s a smart idea to use your online banking account in order to set up a monthly automatic payment from your everyday account to your long term savings account. As an example, you may decide to save 20% of your disposable income each month.

Invest a small portion of your monthly income:

If you opt to save 20% of your monthly disposable income, you may also be interested in investing 10-20% of your monthly income. In order to start investing for your financial future and your retirement. If your monthly budget is tight you may want to start off with investing 10% of your monthly income, while if you have plenty of funds left for luxury items each month, it may be in your best interest to invest 20% of your monthly income.

Consider talking to a financial advisor:

If you speak with a financial advisor, they should be able to give you valuable advice on how you can tweak your monthly budget, in order to increase your passive income.

Hopefully you’ll find managing your finances a whole lot easier after reading all of the finance related tips which are listed above. As taking control of your finances doesn’t have to be a stressful or arduous task.

Filed Under: Finance

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Hey, it's Charles! And I'm the scribbler behind The Lead Belly. You might know it by its former name, Bar Belly. But since the place is inspired by the great singer, we got creative with the name. Do you remember those scenes in the movies where the theme is set to be sad and it's cold and raining outside with a slow sad song playing in the background? Yes. Read More…

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Hey, it's Charles! And I'm the scribbler behind The Lead Belly. You might know it by its former name, Bar Belly. But since the place is inspired by the great singer, we got creative with the name. Do you remember those scenes in the movies where the theme is set to be sad and it's cold and raining outside with a slow sad song playing in the background? Yes. Read More…

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