When it comes to personal finance matters in Singapore, most of us turn to banks for help – unaware that co-operatives can provide aid as well. It is likely that we are ill-informed as to what these co-operatives have to offer us.
The Singapore Teachers’ Co-operative Society Ltd (TCOS) is an example of one such co-operative that can be useful for her members – mainly employees of Ministry Of Education – by providing banking-like facilities to them.
#1 Bonus Savings
TCOS offers a “save-as-you-earn” account (dubbed Bonus Savings) that gives an effective interest rate of 3.08% per annum. This comes with a small catch. Members taking this up need to commit to 24 monthly payments, with a contribution range between $20 to a maximum of $500 per month.
This scheme is particularly useful for those who want to build up their savings over a 2-year period. The returns provided via interest far surpasses what you can get in a regular saving account at a commercial bank.
For example, a teacher deciding to save $300 per month into this account will earn a total interest of $221.76 on completion of 24 months.
#2 Share Capital And Dividends
Similar to public listed companies, TCOS is owned by her members. The best part about that is that TCOS pays out annual dividends of about 8%. Which bluechip stock pays that?
However, there is one significant difference between a member of TCOS and a shareholder of a public listed company. While you may purchase as many shares as you can possibly afford to from a listed company, the amount of shares you can purchase at TCOS is capped at 2,000 (which costs $2,000). There is no option to purchase more even if you would like to do so.
Here are the dividend payouts over the past decade:
As you can see, dividend payouts have been hovering around 8% in recent years. Assuming a member subscribed to the maximum allowed share of 2,000, this will mean dividends amounting to a total of $800, or $160 per year.
#3 Taking A Personal Loan
Taking a personal loan can be very expensive if you get it from a commercial bank. For example, personal loans from banks charge an annual interest rate are at about 7-8% on average.
On the other hand, TCOS offers ranging from a variety of different loans to its members with a much lower interest rates of 3% to 5.25%, with repayment terms of up to 60 months.
While we generally don’t encourage people to take out loans unnecessarily as it will ultimately increase your expenses, the next best thing you could possibly do (if you really need to take a loan) is to source for the best possible deal.
At 3% per annum, we dare say that TCOS interest rates are pretty attractive when compared to that of a commercial bank.
How Much Does It Cost To Be A Member?
Being a member of TCOS is not going to cost much. There is a one-time membership fee of $10. Adding on to that, members will also need to contribute between $20 to $500 monthly in order to purchase shares capital in the co-operative, of which they can expect about 8% of dividends annually as mentioned earlier.
Finally, they are expected to contribute $1 per month to a Common Good Fund that would entitle them to some monetary benefits upon retirement, or in the event of an unfortunate death.
It is unrealistic to think that the banking-like services provided by TCOS would help much with anyone retirement planning. However, there are no reasons why teachers cannot earn just a little more income simply by understanding some of the services provided by TCOS, and get the most out of it.
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