As the economic situation worsens amidst the Coronavirus pandemic, Singapore's government has taken a proactive decision to issue cash handouts. On March 26, 2020 by Deputy Prime Minister Heng announced that the cash payout would be tripled from the scheduled amount, as an assurance and support to Singaporeans who are concerned about coping with their household expenses during this period of economic uncertainty.
The cash payouts range from S$300 to S$600. Additionally, parents with at least one Singaporean child 20 years old or younger will also receive an extra $300 in cash. Older individuals will receive an additional S$100 (previously to be received as a PAssion Car Top-Up). For those who desperately need this sum of money to tide them over during this period, it is indeed a timely offer that can give them peace of mind. On the other hand, those who are financially stable can also make good use of these funds. What should you do with your payout?
Invest Smarter: How to Avoid Costly Fees
While it is tempting to use your new cash for a fun shopping purchase, investing the payout gives you the opportunity to multiply your funds—providing better value in the long-term. With that said, a few hundred dollars won't get you very far if your brokerage charges excessive fees. We recommend that you compare brokerage firms in order to ensure that you are getting the most out of your payout. For example, the best online brokerages typically charge fees that are about 33%-50% of their competitor's commissions. This means you're effectively throwing money away if you currently use an overly expensive broker.
If you don't feel comfortable research and investing in companies on your own, you might be better off investing with a robo advisor. These platforms automate tasks of typical wealth managers and financial advisors to offer comparable services at a fraction of the cost. Furthermore, many of the top robo advisors have low minimum investment amounts, which allows you to put your Care & Support payout to use immediately.
Save for Rainy Days or Vacations
For the more risk-averse individuals, it can be more comforting to put the cash payout away in savings, rather than investing. By stashing money in a savings account, you can save them for unexpected emergencies that may arise down the road. For example, the payout can easily cover the cost of bills and expenses, if you were to temporarily lose your job or require an unexpected medical procedure. For the optimistic thinkers, these savings could go towards a vacation once it is again safe to travel for leisure. Either way, there is merit to putting away money for future use.
In many ways, savings accounts are simpler to understand than stocks and bonds. However, the interest rates offered by different accounts vary significantly. Therefore, we strongly recommend that you compare the best accounts to make sure you're getting the best value possible.
Upgrade Your Home Appliance
If the cash is burning a hole in your pocket, it's possible to at least make a worthwhile purchase. For example, this could be an opportune time to replace older home appliances. There is no need to splurge on a thousand-dollar Dyson V11 Absolute, but the cash payout can offer some relief when you need extra funds to replace the old hoover. Not only would a new appliance make your home more comfortable, many new appliances are more energy efficient than older models, so you are likely to save money over time. Appliances can be expensive, so it is not a bad idea to conduct a little online research before making any purchases, to understand about how much you should end up paying.
Pay Down Existing Debts
However before you invest, save or spend your new cash, it is important to consider repaying any outstanding debts. The cash payout can come in very handy for those who have a debt to clear. Debt can be a useful tool, but also a serious threat to our financial stability because it prevents us from saving or saving money for an emergency. It is also a challenge for those who want to retire with a comfortable retirement fund.
Whether you have unpaid credit card bills, outstanding loans or even money owed to a friend, the timely repayment will put an end to accruing interest that can easily snowball into an exorbitant amount. Additionally, repaying outstanding loan balances and credit card debts can earn a better credit score, which is essential for Singaporeans who need to maintain a healthy credit line for their home or vehicle financing.
Personal Finance Decisions Are Personal
Given the uncertainty surrounding global health and economies, it is wise to put your cash payout to good use. This will mean different things to different individuals, so there's no one best way to proceed. Hopefully this article will give you some food for thought, before you receive your payout (payouts will be sent starting at the end August).