Monday, October 24, 2016

Why I Will Not Be Using POSB Cashback Bonus (Because It is Lame)

POSB has just recently launched a new cashback programme called POSB Cashback Bonus. It claims that “it’s cashback with more kick. POSB Cashback Bonus gives you up to S$130 a month, for the banking that you do.”

Ok so let’s see how do you get that “up to S$130” a month? So I went to POSB’s Cashback Bonus’s landing page for that. How it works according to the page:

Well, sounds good. But which three among these five should I choose? How exactly do I calculate that? There are no mentions of any percentage or methodology of how you get to that desired cashback?

Ok, so there is a calculator. “Use our Calculator to uncover how much you can earn.”

You can plug in various numbers and it will tell you how much cashback you will earn. But it still doesn’t tell you how it get to those numbers.

So I went on to check the FAQs. And then the full terms and conditions. STILL NOTHING. There are no mentions of what are the percentages of rebate for each category. Of course I know I can reverse engineer by using the calculator, but then this kind of defeats the purpose right?

From the full TnCs: “We will accord you the Cashback based on your Eligible Transactions in each calendar month, subject to the applicable minimum transaction amount (if any) and monthly Cashback cap (“Cashback Cap”). Details of the Cashback rate, minimum amount requirements and Cashback Cap will be published on our website, which we may revise from time to time at our discretion and without prior notice.”

Yeah, at your discretion and of which I can’t find. (Would be glad for anyone to actually point out that I am wrong in this.)

Now that is really bugging me. 

Lack of transparency

If this isn’t a POSB page, I would be saying “RUN!! RUN!! RUN!!!” My red flags are all raised here. Always be aware of investment plans or financials schemes that promise you “up to whatever whatever” but never tell you exactly how you can get that.

To me, that’s not transparent at all, probably deceitful and borderline dishonest. Hey that’s just my personal opinion. But my rule of thumb to myself is to be aware and beware of schemes that sound overpromising because they usually are.

Now to be clear I am not saying that this is a scam. Because it’s POSB. But still, I am pretty disappointed.

Now to be clear that I am not targeting POSB unfairly, let’s check OCBC’s 360 account and UOB’s One account. As you can see, the percentage of rebates for each category is clearly stated.

So, I can easily compare it with other products and choose one that is the best suited for me. Transparency wise, OCBC 1, UOB 1, POSB 0.

Well, the only reason I can think of for you to hide your exact cashback percentages is because it is nowhere near as good as your competitors.


Well, I can also refer to Mothership’s article on this cashback programme, and since Mothership’s article was paid and sponsored by POSB, so I can only assume that the math is correct.

Here are the two examples provided by Mothership:

Scenario A: Early-Career Individual
Salary Credit: $3,000
Credit Card Spend: $1,000
Home Loan Instalments: $1,000
Insurance: $300
Investments: $300

Total Cashback: $9 + $3 + $30 + $9 + $9 = $60 / month = $720 / year

Scenario B: Mid-Career Individual
Salary Credit: $6,500
Credit Card Spend: $2,500
Home Loan Instalments: $1,000
Insurance: $500
Investments: $1,000

Total Cashback: $19.50 + $7.50 + $30 + $15 + $30 = $102 / month = $1,224 / year

In both cases, it seems like the rebate percentages (for now?) are:
Salary Credit: 0.3% (cap at $20, meaning take home pay of $6,666.67)
Credit Card Spend: 0.3% (cap at $20, meaning credit card spend of $6,666.67)
Home Loan Instalments: 3% (cap at $30, meaning monthly instalments of $1,000.00)
Insurance: 3% (cap at $30, meaning monthly insurance payment of $1,000.00)
Investments: 3% (cap at $30, meaning monthly investment amount of $1,000.00)

Ok this is simply lame

1) POSB’s salary crediting require minimum of $2,500 and cashback rate is 0.3%. OCBC’s salary crediting minimum if $2,000 and gives you 1.2%. So POSB has a higher requirement and yet only gives a quarter of the rebates? And you still need to do another two things before you get this 0.3%? Yawn.

2) OCBC offers 0.5% while POSB’s only 0.3%. But OCBC has a minimum spend requirement of $500 per month, while POSB’s minimum spend on the credit card is <unknown value>, so this is probably good for those who aren't in a habit of spending at least $500 on their credit card. 

3) Ok, getting 3% back from your monthly home loan instalments does seem like a good deal. But, it probably only makes sense if you have already getting your mortgage through DBS/POSB. For those who already have a home loan with other banks, you will have to calculate the difference in interest rates that you already have vs what DBS/POSB can give you, then the potential savings you might get from this cashback programme by switching to DBS/POSB, and also the cost required in switching / refinancing your home loan. Oh, and did I mention, they may have the discretion to change that cashback percentage anytime they want? So your true savings by moving your mortgage to them is most likely nowhere near 3%.

4) Pay your POSB/DBS insurance premiums and you get 3% cashback. But the catch is that it will only be recognised on the first 12 months of your purchase. And it is only valid for new plans purchased after signing up for the POSB Cashback Bonus, not existing insurance plans. First of all, I personally would not advise my friends to purchase insurance through banks. The best is still to purchase insurance through a financial advisor that you are sure you can trust, or purchase term insurance through a DIY platform. And, are you likely to purchase a new insurance plan each year? Otherwise, not quite realistic to make this one of the three items you need to maintain in order to enjoy the cashback.

5) Invest through POSB/DBS and you get 3% cashback. Same as point 4 above. Your investment amount will only be recognised on the first 12 months. Your existing investments don’t count – only new ones do. Are you going to buy a new investment plan through POSB each year? Well, at least for me, I don’t think I will be able to do this either. Also, within the choices available, I would perhaps only be attracted to POSB Invest-Saver, which allows me to buy into the Nikko AM Singapore STI ETF (SGX:G3B) or ABF SingaporeBond Index Fund (SGX:A35); but I will not be interested in buying a new mutual fund through its Unit Trust Regular Savings Plan every year.

Personally I already maintain a POSB Invest Saver plan with them but hey, this is not eligible! Since it is existing and not new. Ouch!

OCBC only gives you 1% for items (4) and (5) for 12 months, but at least it isn't conditional upon that for you to enjoy cashbacks from other categories. That is an important distinction to remember.

So, how am I going to pick three out of these five categories in order to enjoy “up to $130” cashback each month? Well, you tell me.

Sunday, October 16, 2016

SPH Newspaper Circulation Numbers - How Bad Exactly Is It?

SPH (SGX:T39) has just announced its Full Year 2016 (Sep 2015 to Aug 2016) results last Friday.

Plenty of news articles and blogs have been writing about:
·         Profits are also going down

So I am not going to go into such details, and interested readers can click on those links above.

But, my question is how bad exactly the trend of decline of readership in the major SPH publications is?

More importantly, how bad is The New Paper doing, such that the organisation decided to merge (read: close) it with My Paper?

Curious about the details, I decided to look it up. Here’s a table that I have compiled for the various major newspapers that SPH publishes. SPH does not report the current circulation of My Paper and it is free anyway, so not quite comparable with the rest of their major newspapers.

(Source and methodology will be explained at the end of this article)

The table lists the daily average newspaper circulation from 2006 to 2015. I have also pulled out the best year and worst year within this 10-year period for each of the papers; and compared 2015 with it.

So we can see that Straits Times is actually still not doing so badly! Though it is on a general decline trend, the drop is not that big and even seen a slight rebound last year.

More surprising is the performance of Business Times, which has improved much more compared with 2006 and more or less held steady in recent years. But because of the small readership, Business Times is only the seventh most read and less than 10% of the readership of Straits Times.

However, for Lianhe Zaobao, Lianhe Wanbao, New Paper and Berita Harian, we can see that almost all of them have a straight downward trend from 2006 to 2015. New Paper is particularly worst, losing also 40% of their readership in these 10 years.

Here’s what it looks in a chart and the decline is more apparent. I didn’t include Straits Times in the chart because the line would be much higher than the rest, making the details of the rest hard to see.

You can see that back in 2006, Shin Min, Wanbao and New Paper had similar circulation numbers. But while Shin Min managed to grow some before dropping back to their 2006 levels, Wanbao and New Paper’s circulation only continued to drop.

So yes, this is a challenging time for the media and publication industry, but its impact on the different publication is not the same. While Straits Times remains (sort of) resilient as the flagship publication, Lianhe Wanbao and New Paper seems to be the worst hit over the past decade.

All in all, SPH has more or less been able to defend the readership of their major publications, and is probably already better (or less bad) than other major newspapers overseas, owing to their monopoly in certain market segments of the media industry in Singapore. They have also done well in increasing the unique digital subscriber numbers for ST, BT and LHZB, which will likely be the key for them to help cushion the lost in print subscribers. The battle forward will be to find a way to monetise the digital eyeballs which so far has really been a question that baffled media organisations around the world.


Source and methodology:

Numbers are taken from SPH’s annual reports from 2006 to 2015.

The numbers might be slightly different from what is published. For example, in SPH AR 2015, Straits Times’ circulation is 481,700; including 304,300 print and 177,400 digital. However, at the bottom of the page, there is this line that says “The Straits Times / The Sunday Times unique digital subscribers: 60,871”. Hence, I took 304,300 and 60,871 to come to the number of 365,171; instead of using 481,700. This is to eliminate the digital subscribers that also subscribe to the print versions, and hence will be double-counted in the larger number, even though that is indeed in accordance of the rules by the Audit Bureau of Circulations.

Also, in earlier years, the numbers of the Sunday version and the weekday versions of various papers are reported separately. So in order to maintain comparability, I took a weighted average of the weekday numbers and the Sunday number. (Daily average = (Sunday number + 6 x weekday numbers) / 7))