frugal

Manage your cash in ELASTIQ (Limited Promotion!)

I used to be a happy owner of my Standard Chartered Jumpstart account, back when it had 2% interest rate. But now that it has halved, I had to look for alternatives. Luckily, insurance savings policies (such as ELASTIQ) were rising in popularity. Outside of Singlife’s 2.5% which many people already religiously swear by, I still needed to store my excess cash outside of $10,000 somewhere.

After looking around, bank accounts did not cut it, fixed deposits posed liquidity problems, Singapore Savings Bonds just were not worth it.

Stressful low interest rates

I considered cash management solutions such as Stashaway Simple and Endowus Cash Smart. However, their returns did not seem very exciting. Stashaway Simple has a “projected rate of 1.9%”, while Endowus Cash Smart Enhanced yielded a range of 1.9% to 2.2%. Both claim to be not guaranteed.

Well, time to look elsewhere. Then, I stumbled on Dash EasyEarn on Seedly. On a closer inspection, it is a policy by Etiqa Insurance Pte. Ltd. Then, I found out about Etiqa’s ELASTIQ, which offers 1.8% guaranteed returns.

What Etiqa's ELASTIQ is offering

But who are they?

Etiqa is part of Maybank, the fourth largest Southeast Asian bank. Despite that, I was still a bit skeptical. Like Singlife, it is also protected under the Policy’s Owners’ Protection Scheme by SDIC. This means that in the case of Etiqa going bankrupt, the surrender value of your policy would be reimbursed, provided that the surrender value is below $100k.

Okay, it’s safe. But what’s so good about it?

Firstly, the interest rate of 1.8% is guaranteed (on your initial premium i.e. initial top up) for the first three years. This is unheard of. Even Dash’s EasyEarn has an interest of 2% for the first year only.

Secondly, if you made no withdrawals for 3 years, there is an additional bonus of (non-guaranteed) 0.3%. In addition, this bonus is recurring, thus every 3 years you will be able to enjoy the bonus if no withdrawals are made.

Thirdly, being on a life insurance plan means that you will be paid a death benefit. In ELASTIQ’s case, it would be 106.8% of your account value, if you pass on before the age of 100 (which is the maturity date of the policy).

Seems too good to be true, any catch?

Yes there are few catches. For your initial premium (payment), you have to top up a sum of $5,000 to $50,000. After that, any other top-ups will have to be in increments of $500, with the minimum being $500. (i.e. $500, $1000, $1500, etc.) The maximum amount you can top up at once is $200,000. Also, you have to withdraw in increments of $500. If you have an odd balance, you would not be able to withdraw it. This makes it quite awkward because you may not be able to withdraw the interest you collect.

Next, there is a minimum balance of $5000 required. If not, you will be charged a $5 fee.

Moreover, there is an initial lock-up period of 90 days, and after that, there will be no penalty for withdrawal.

In addition, Etiqa “reserves the right to delay the payment of the surrender or partial withdrawal value for up to a period of 6 months from the date of your surrender or partial withdrawal application”. Although this clause was also included in Dash EasyEarn’s Terms & Conditions, I would say that this is a “risk” that I am willing to take.

Lastly, the 1.8% guaranteed interest is only on your initial premium. Therefore, it is only applicable for your first-time top-up. Top-ups after that, is “based on prevailing market conditions”. This means that it is not guaranteed.

In summary

These are the few competing products for ELASTIQ, in my opinion.

Etiqa ELASTIQSinglife AccountDash EasyEarnStandard Chartered JumpstartEndowus CashSmart
Projected Yield1.8% (first 3 years)0.3% (loyalty bonus)2.5% for first $10k2% for the first year, 1.5% subsequently1% for first $20k1.9% to 2.2%
TypeInsurance Savings PlanInsurance Savings PlanInsurance Savings PlanBank AccountMoney Market Funds
Minimum Initial Top Up$5000$500$2000$0$10,000
Minimum Subsequent Top Up$500$0$500$0$100
Minimum Balance$5000$100$2000$0$0

At the end of the day, Singlife still remains the superior product. (You can use my referral link here.) 

Note: We both gain a small kickback when you sign up for a Debit Card from them.

However, Etiqa’s ELASTIQ puts up a really good fight. In my opinion, if you still have excess cash, it is a worthy consideration.

Performance of ELASTIQ

Etiqa ELASTIQSinglife AccountDash EasyEarnStandard Chartered JumpstartEndowus CashSmart
Initial Top Up$10,000$10,000$10,000$10,000$10,000
End of Year 1$10180$10250$10200$10100$10190 -$10220
End of Year 2$10363.24$10506.25$10353$10201$10383.61 -$10444.84
End of Year 3$10549.77$10768.90$10508.29$10303.01$10580.90 -$10674.62
Without withdrawals$10581.42
Total Earnings$581.42$768.90$508.29$303.01$580.90 -$674.72

From this mini-simulation that I have done, you can see that ELASTIQ’s returns are relatively attractive.

Okay, sign me up for ELASTIQ

You after you sign up for ELASTIQ.

You can sign up through PolicyPal. They have a limited NDP promotion ongoing right now. You can use my referral code “juniorsnf” or my referral link here.

This is how the promotion works.

Total Premium PaidRebatesCapitaLand Voucher
S$5,000 – S$9,99910
S$10,000 – S$25,99920
S$26,000 – S$49,99930
S$50,0003055

You can earn up to a rebate of $85! This promotion ends on 31 August 2020.

Note: This referral link gives me a small kickback, and it would help in the sustainability of this blog.

Disclosure: This article is meant purely for informational purposes and should not be construed as financial advice. For customised advice on your financial needs, you should seek advice from a licensed representative. It has not been reviewed by MAS. Information is correct as at 14 August 2020.

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