Here’s yet another bombshell from SingLife – first temporarily closing new signups since their merger with Aviva and then reducing interest rates gradually on their SingLife account from 2.5% to 2% to 1.5% and now 1%.
However, users can still earn bonus return of 0.5% if they spend at least $500 on their SingLife debit card or sign up for an investment-linked policy called Grow.
Well, it wasn’t unanticipated, as I’ve previously mentioned that SingLife’s rates were above market for a while and they have been using the high yields to attract users into its ecosystem and then cross-sell them with insurance plans and investment products.
Interest rates across the board have fallen off the cliff alongside yields on government bonds. You can see that safe yielding Singapore Savings Bonds for the July 2021 issuance yields just 1.53% per year on average when holding for 10 years.
The strategy might have worked, with 1.5 million users onboarded onto its platform with its aggressive marketing campaign over the past year.
With the rates reduced from 1.5% to 1% for the first $10,000 and from 1% to 0.5% on the next $90K, I think any young adult looking to grow their wealth should forget about using SingLife for investment purposes.
I do think SingLife remains a good place to store emergency funds because of their quick withdrawal times to bank accounts.
If you’re holding too much cash then I think you’d need to re-evaluate your investment strategy because inflation is 2.1% per year in Singapore and putting too much cash in a 1% savings account means you have a net loss of 1% every year.
Remember we need to look at real yields (i.e. yields adjusted for inflation) rather than nominal yields. But yields don’t come for free so we need to evaluate the risks against the projected or expected yields.