Last post, I was pretty heavy handed in judging BIBD’s new initiative to get people to save. While I don’t agree with them calling this product a “Certificate of Deposit” or CD, there are some ideas that stewed in my mind. One of this came from a conversation I had with a friend of mine. Putting your emergency fund in BIBD Aspirasi was just an idea that sparked.
I like to ask people “What do you think of BIBD Aspirasi?” to see if my train of thought made sense. So the conversation from this one friend actually started with talking about emergency funds. He told me “I’ve got the right amount set up (6 months expenses) and I’m never touching it!” Surprise, surprise, I instinctively said “In that case, why not put in BIBD Aspirasi?” And this lead to me thinking “Wow, maybe I’ve been too hasty in judging it.”
My Reservations on BIBD Aspirasi
I need to put forward my stance once again. There are 2 things that I am not happy with Aspirasi:
- 0.2% returns,
- Lucky Draw as a selling point.
I really have nothing against BIBD but the way they spun this product to attract people to save feels wrong to me. I feel that they’re not instilling the discipline that is to save; rather, using a game of chance to thrill and excite the non-savers. But I digress. With these in mind, let’s dig into the pros! (Whereas the last post was mostly cons)
Know what an Emergency fund is
First thing’s first, an emergency fund is set up so that you have quick access to cash during unforeseen financial problems. An example of this might be car parts needing fixing, emergency house maintenance or even retrenchment. The base concepts of an emergency fund are:
- Having at least 3-6 months’ income or expenses saved up,
- Needs to be easily accessible i.e. not locked in stocks or investments that takes time to convert to cash,
- Only used for unforeseen financial problems.
Putting Your Emergency Fund in BIBD Aspirasi
The pros I’ve mulled over isn’t the product on the surface (i.e. as an investment) but using it as a tool for your financial needs. If you ended up putting your emergency fund in BIBD Aspirasi, there’s a potentially large reward compared to negligible risks.
1. Maximising your chances at Lucky draw
The thing with Aspirasi is that for every $50 you put in, you gain a chance to win their cash prizes. So if your emergency fund is $5,000 you’d have 100 chances! And since you shouldn’t be touching that money for a while anyway, why not park it there to up your chances?
2. The money is liquid
Because of how Aspirasi is set up, your money is not “locked” in the similar way as if you put it in Fixed Deposits. Therefore, you do not incur penalties for taking the money out if there really is an emergency.
3. 0.2% is still better than the normal savings account
Fine, 0.05% is still 0.05% more. I still don’t like the returns for this but it’s an additional “bonus” for parking your money there. Again, it’s money you don’t absolutely need to use so it’s only more beneficial. Compounding interest will work its magic over time and do better than normal savings accounts.
4. Your money is protected
Again with the “Maximum $50,000 deposit insurance”: emergency funds are unlikely to be gigantic amounts so your funds should be pretty safe in Aspirasi.
BIBD Aspirasi isn’t a product I’m crazy for when viewed through the investment lens. However, putting your emergency fund in BIBD Aspirasi has potential upsides while having practically no downsides! So, if you’re considering parking your emergency funds, at least for the next year or two, you can check out BIBD Aspirasi. Who knows, you could even win the cash prize!
For good ideas and true innovation, you need human interaction, conflict, argument, debate.
– Margaret Heffernan