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How does a regular savings plan work in Singapore?

A Beginner's Guide to Regular Savings Plans in Singapore - MoneyMate  Singapore

Does the regular savings plan work? 

It’s one question that many people are looking for answers to. The basic definition of saving money is not spending any amount on it, but certain things need to be considered before implementing this process. For instance, how much money needs to be set aside every month and the ideal period for this kind of planning.

Typically speaking, if you want to spend a large sum in instalments within a specific timeframe, the regular savings plan could come in handy. However, all cities or countries have their definition of saving up some cash for something special like holidaying, buying an iPhone 6 or just putting away funds for future use. And in Singapore’s case, the term “regular savings” refers to a process of investing a certain amount of money every month for using it in the future.

For instance, let’s say that an individual earns $3000 monthly in Singapore and wants to use this entire sum to set up a regular savings plan. If he decides to put away S$500 (which is about RM1120) every month, then at the end of the year, he would be able to save S$6000 (about RM12240). It means that his investment has improved by almost 50% compared with only saving S$3000 (roughly Rm6160) annually without implementing any systematic way. It’s basically how you can get more returns through a regular savings plan in Singapore, so anyone can use it to improve their earnings and put away a hefty sum for future use.

Set up a regular savings plan with a direct debit facility

In addition, if you are looking forward to saving more money from your monthly income, the best way would be to set up a regular savings plan with a direct debit facility from your bank account. It means that you don’t have to do anything special except permit your bank to take out a certain amount of money each month. The rest would be taken care of by financial institutions in Singapore, which will ensure that the entire process goes according to plan without any mistakes or misunderstandings. However, before going ahead with this method, you need to make sure that your salary is credited in full and on time every month without fail because only then the entire savings process goes as planned.

In conclusion

A regular savings plan is a great way to invest money for future use, and anyone can give it a try no matter their socio-economic background. However, you need to keep in mind that if you don’t make any effort on your own and depend on the bank or financial institution, chances of success are minimal. Therefore, before opting for a direct debit facility, read all terms and conditions, which means you should go through the contract carefully before signing anything on paper. It would help you understand how much interest rate you’re going to pay and whether there’s any penalty fee for withdrawing your funds early without prior notice from the bank itself.

Also, note that Singapore’s regular savings plan is not the only way to save some money for future use. There are many other investment avenues in which you can invest your money without being concerned about penalties or fees whatsoever. 

Choose according to your preference

You need to choose according to your preference and then consider how much return you’re expecting on your investment before putting any of your hard-earned cash into it. Unlike Singapore’s regular savings plan, there are sometimes specific fees charged for setting it up, cancelling it early or even transferring funds from one bank account to another.

Most new-age investment plans like mutual funds come with several benefits attached, which means that the more you invest – the more returns you get back over time. Therefore, if you decide to put your money into a regular savings plan, make sure that you’re well aware of how it works and whether there are any hidden charges, which means you may have to pay more interest rate than what was initially decided upon.

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