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Interest earned on savings accounts

How long does it take to buy different items with the interest on your savings?

With interest rates as low as they are, you’d be forgiven for thinking your savings are increasing at snail speed. Even before the pandemic hit, interest rates were historically low at just 0.05% for a POSB savings account and from 0.2-3.8% for other savings accounts. While the low rates are good news for those paying down debt, they’re bad news for savers.

To find out just how bad it is, we’ve researched how long it would take to earn enough interest to buy different items, such as a movie ticket or home deposit, with an easy access POSB savings account in 2020 with a $10,000 initial deposit. Spoiler alert: you could be waiting a while. We’ve also pulled historical interest rates for every five years since 1985 to see when in recent history it was easier to make more on your hard-earned money.

Quick facts

  • The interest rate on the average POSB savings account in Singapore is currently 0.05%
  • That means it would take a year to save for a $5 meal at a hawker stall
  • Saving for a wedding would take 3,684 years

How long do you have to wait to buy different items with current interest rates?

Hope you’re not hungry for noodles – with a savings rate of 0.05% and an initial deposit of $10,000, it would take a whole year to afford a $5 meal at a hawker stall. That Netflix subscription you’ve been relying on heavily since the pandemic started? You’d have to wait two years to save enough for just one month of subscription fees. It’ll take six years of saving to enjoy pastimes like visiting the cinema, the Gardens by the Bay conservatory or taking a return cable car to Sentosa. If you want to visit Universal Studios on the other side of that cable ride with your earned interest, it’ll take you double that (12 years)!

If you’ve always dreamed about taking a staycation at the Marina Bay Sands and snapping an envied shot in the hotel’s infinity-edge pool, it might remain just that – a dream. Our calculations show it’ll take you 78 years to save up for this experience using only the interest earned on your initial $10,000 deposit.

What about paying for basic necessities like food? Well, if you live to 100 and deposited the initial $10,000 when you were 13 years old, you might live long enough to afford the luxury of a Tingkat meal delivery service for a whole 20 days. That’s right – it’ll take you 87 years to save up enough for this service. Talk about convenience!

Unfortunately, things like weddings, down payments on apartments and cars are probably out of reach if you’re using this savings method. These big-ticket items will take you more than a lifetime to save up for but maybe your 34th generation of grandchildren can reap the rewards? It’ll take you 3,410 years to afford a down payment on an HDB apartment worth $450,000, 3,684 years to celebrate your marriage with a lavish $53,100 wedding and 4,741 years to buy a Honda Civic. You might be better off ordering an Uber.

List of productsAmount needed to saveMonths to purchase ($10,000 deposit)Years to purchase ($10,000 deposit)
Hawker stall meal$5121
Dairy Milk 180g chocolate$5.20131
Netflix monthly subscription$11.98292
Cinema ticket – gold class$31.50766
Gardens by the Bay tickets – 2 conservatories – adult ticket$28686
Sentosa cable car$29.50716
Singapore Sling at Raffles Hotel Long Bar$30726
Universal Studios Singapore ticket$5914212
1 night stay at Marina Bay Sands on a Saturday night staycation$39993978
20 days of Tingkat meals for 2$4431,04187
Down payment on an HDB flat$45,00040,9153,410
Wedding$53,10044,2133,684
Honda Civic 1.6$96,99956,8874,741

How long do you have to wait if you have lower savings?

$10,000 in savings might be a steep ask for some, so we’ve also calculated the interest earned on an initial deposit of just $1,000. Generally speaking, it’ll take you roughly 10x as long to purchase the things you’re after with this deposit. That means a $5 meal from a hawker stall would take you 10 years to purchase, while you’d be waiting just over 59 years for a Singapore Sling. You might not live to visit Universal Studios as it’ll take you almost 115 years to reach this milestone. Meanwhile, things like hotel stays and monthly Tingkat deliveries will take you more than 600 years to save for.

List of productsAmount needed to saveMonths to purchase ($1,000 deposit)Years to purchase ($1,000 deposit)
Hawker stall meal$512010
Dairy Milk 180g chocolate$5.2012510.4
Netflix monthly subscription$11.9828623.8
Cinema ticket – gold class$31.5074562.1
Gardens by the Bay tickets – 2 conservatories – adult ticket$2866355.3
Sentosa cable car$29.5069858.2
Singapore Sling at Raffles Hotel Long Bar$3071059.2
Universal Studios Singapore ticket$591,376114.7
1 night stay at Marina Bay Sands on a Saturday night staycation$3998,059671.6
20 days of Tingkat meals for 2$4438,802733.5
Down payment on an HDB flat$45,000Too long to calculateToo long to calculate
Wedding$53,100Too long to calculateToo long to calculate
Honda Civic 1.6$96,999Too long to calculateToo long to calculate

How long would you have needed to wait with historical interest rates?

No doubt about it, boomers won the generational jackpot for interest rates on savings accounts. Those born in the 1950s would be in their mid-30s in 1985 – which just so happens to have been prime time for interest rates. The average interest rate on savings accounts was a whopping 6.3% back then, making saving a lot easier.

In fact, you could have saved for around half of the items on our list in just 1 month using the interest earned on a $10,000 deposit. One month! You’d have to wait two months to visit Universal Studios – just enough time to hype yourself up for a ride on the Battlestar Galactica roller-coaster. Meanwhile, it would take you 8 months to save for a staycation at the Marina Bay Sands and 9 months to save for a 20-day delivery of Tingkat meals. All in a year’s work. The big-ticket items will definitely take you more than a year to save for but still within reach in a lifetime. A down payment on a flat would take around 27 years to save for on interest alone, a wedding 29 years and a car would take about 38 years.

1985 wasn’t the only lucky year. All the items on our list were achievable within a saver’s lifetime from then until the year 2000, when the average savings rate dropped to 1.34%. By then, big-ticket items like weddings and cars would take over 100 years to save for, and just five years later in 2005, they would take over 700 years to save for.

List of productsAmount needed to saveMonths to purchase ($10,000 deposit)Years to purchase ($10,000 deposit)
Hawker stall meal$510.1
Dairy Milk 180g chocolate$5.2010.1
Netflix monthly subscription$11.9810.1
Cinema ticket – gold class$31.5010.1
Gardens by the Bay tickets – 2 conservatories – adult ticket$2810.1
Sentosa cable car$29.5010.1
Singapore Sling at Raffles Hotel Long Bar$3010.1
Universal Studios Singapore ticket$5920.2
1 night stay at Marina Bay Sands on a Saturday night staycation$39980.7
20 days of Tingkat meals for 2$44390.8
Down payment on an HDB flat$45,00032627.2
Wedding$53,10035229.3
Honda Civic 1.6$96,99945337.8

How can I save faster?

Concerned about your retirement savings? It’s not all bad news – the interest rate used in this example is the average POSB savings rate, but there are other accounts that offer higher returns. Interest rates for savings accounts in Singapore tend to range from 0.2-3.8% – quite a bit higher than your standard POSB account. You can check out this handy guide on savings accounts to find the best account for your needs.

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