It is the start of a new year and this year I have resolved to taking a more hands free approach with my finances – preferring to spend my time on income generating activity like my career or my side hustle and leaving my investments to run by itself.
In recent months, I have had conversations with my peers on the best way to work our savings or generate better interest rate in light of the dismal rate we are currently getting from the banks… Not to mention the numerous hoops one have to attain to get the max interest rate.
While saving up for big ticket items as we are journeying through life, we are constantly on the lookout for a liquid method to generate more interest on our cash stashed up in the bank, be it for our investment war chest or emergency savings.
Readers of my blog may know from past blog posts that I have six months worth of expenses stashed in my DBS multiplier Account and my Standard Chartered Jumpstart account. Sadly, the interest rate for both are pretty negligible and it is time to look for an alternative to grow this pool of savings.
Please note that this is not Financial Advice and your concept of emergency savings might be different from mine.
Before looking for a home for my emergency savings, I did have a couple of guidelines in place:
- Non-Volatile – I am not comfortable with placing my savings into an asset where the value might rise and fall in the short term.
- Easily Movable – This sum of money has to be easily accessible at all times without huge loss of value.
- Easy to achieve desired interest rate – Unlike the bank accounts where I have to credit my salary, make 5 transactions, purchase insurance/mortgages to maximise my interest rate, I am looking for an easy path to obtain the max % of interest.
After working within the guidelines above, I came to the conclusion that I should seriously look into converting my emergency savings into Usdc stable coins and then lending it to Hodlnaut (I wrote a quick start guide here previously) and Crypto.com.
What is USDC?
USDC is a stablecoin pegged to the price of a US dollar. It is always redeemable on a one-to-one basis for US dollars. As of August 2021, more than $20 billion in USDC has been minted.
Its goal is to make transactions faster and cheaper than traditional payments while reducing the volatility typically associated with cryptocurrencies. You can learn more here.
Both Hodlnaut and Crypto.com offers up to 12% per annum on USDC. For Crypto.com, I am a Jade/Indigo user which is why I am getting an extra 2% yield on USDC, for basic users who are on Ruby and below, it is at 8/10% as a start.
Note that for Crypto.com, you will need to lend it for 3 months to achieve the 12%, otherwise it is 10% P.A. for a month term and 8% P.A. if you are looking for a flexible duration.
Here’s Hodlnaut Interest Rates
A big advantage is that Hodlnaut’s USDC lending is flexible and not locked in, like a bank’s fixed deposit. Crypto.com’s USDC lending program can be too but it pays out at 8% interest for that flexibility. Therefore, it is very liquid and fulfils my criteria of being easily accessible.
I shall cover how I convert my money from SGD to USD and transfer it into both Hodlnaut and Crypto.com to clock that sweet 12%.
TLDR version:
- Get a DBS Multicurrency Account (MCA), this will come in handy for your USD conversion. Opening a DBS Multicurrency Account should be free.
- Transfer your SGD to Moomoo, convert it to USD and transfer it back to your DBS MCA. This will take 1-3 business days for your USD to come back from Moomoo. There are no charges too by the way because Moomoo also uses DBS Account on their end.
- Transfer the USD from your DBS MCA to FTX exchange.
- Transfer the USD from FTX Exchange to the FTX App as USDC (Note: this is necessary to eliminate your gas fee and make it cost free)
- Transfer your USDC from FTX App to Hodlnaut/Crypto.com
- Enjoy your sweet 12% interest!
Detailed Steps:
Get a DBS Multicurrency Account (MCA), this will come in handy for your USD conversion. Opening a DBS Multicurrency Account should be free.
One can open a DBS MCA account here. Based on their website, there are no account opening fees, initial deposit required or min balance charges. Important point to note is that using a DBS MCA account and using DBS Remit to transfer USD to FTX Exchange will incur no charges. Not so sure about other banks.
Transfer your SGD to Moomoo, convert it to USD and transfer it back to your DBS MCA.
This step is useful in ensuring that you get the best FX fee for your SGD to USD transfer. Personally, I will prefer IBKR however it is a more tedious process as they do not allow you to convert your currency and withdraw it right away.
In this regard, Moomoo is easier to work with and their rates are definitely better than the DBS Remit rate. So while it may be easy to convert your SGD to USD via DBA MCA while transferring your money, I would highly suggest to use Moomoo for large sums of money as it will be more worthwhile. After all, any money saved is always good. Sign up for Moomoo here.
This step should take ideally around 1-3 business days though during the times I have done so, it typically takes a day only.
Transfer the USD from your DBS MCA to FTX Exchange
As mentioned above, using a DBS MCA account to perform DBS Remit for transferring your USD to FTX will incur no charges. Not so sure about other banks.
TheFiPharmacist has a detailed article here on the transferring process.
Basically, you would navigate to the wallet section and then click on “Deposit” under the USD currency.
From there, click on Deposit via Wire and you will be presented with the bank account details of FTX. Take note of your unique identifier number at this section, you will have to input it in the notes when transferring money on the DBS page.
Go to your DBS iBanking, click on Transfer – you should see DBS Remit and Overseas Transfer, click that.
Add a New Recipient (Follow the FTX bank details and add it here)
Tadah, you should have it listed as a recipient now. Feel free to make your USD transfer over at no cost.
This is the most fuss free method in my opinion. I am a big advocate of Gemini but in this regard, FTX Exchange was the clear winner. It was so much easier to onramp the USD and achieve what we want to do in the fastest and least complex way. Here’s my FTX referral code for 5% off trading fees.
Note that though they said it may take up to 3 business days for your money to clear, mine took barely 4 hours. I transferred it at 4pm, received at 8pm on the same day.
Transfer the USD from FTX Exchange to FTX App as USDC.
Just like Crypto.com having their own Crypto.com App and the Crypto.com Exchange. It is the same thing for FTX. You have to create an account on Ftx App too, this will not be the same account as the one you created on FTX Exchange.
Once done and successfully verified (mine took an hour), you can go to your FTX Exchange and click on “Withdraw”.
Withdraw it as USDC and then go to your FTX App on your phone and click on deposit.
And then click on USDC. Be sure to change your “Showing deposit option specifically for” to US dollar.
Follow the wallet details and input it into your FTX Exchange. You should see the transfer happening near instantaneously.
Transfer your USDC from FTX App to Hodlnaut/Crypto.com
Proceed to your Hodlnaut account and click the “Deposit/Withdrawal” section, choose USDC as your crypto of choice to deposit and remember your address.
For Crypto.com, proceed to your Crypto Wallet, select USD Coin and click on Transfer. You should see the Deposit button and click on External Wallet. It should be on the ERC20 network.
Tip: I prefer to scan the QR code to ensure that I make no mistakes during this step. This is really important because if you were to send it to the wrong address, your USDC would be as good as lost, so do confirm and reconfirm before depositing.
After getting your crypto deposit address from Hodlnaut/Crypto.com, head back to FTX App and “Withdraw” from the FTX App interface.
Enter in the address provided by Hodlnaut/Crypto.com or scan the QR if using a smart phone. There are not fees and it will take approximately 10-15 mins depending on how the confirmation takes.
Ta-dah, you are done and ready to start reaping the sweet 12% interest on your savings once your USDC is received.
Additional Step for Crypto.com
Head to the Earn function and select the Deposit USDC option to start earning interest on your USDC which you have transferred over from FTX App.
Bonus: Note that if you have other Crypto assets, Hodlnaut allows you to do a token swap to USDC (or other assets) at no cost. Below is an example of how it looks swapping BTC to USDC.
Here’s an example of how your interest statement will look like every week.
To conclude, I have been using this method of lending and so far so good. This is better than leaving my savings in the bank. I am aware of the potential risks such as hacking etc but it is a risk I am willing to undertake at this moment.
Lending USDC is also somewhat comforting to me since in theory it is pegged 1:1 and there is no volatility in that. It does expose my savings to currency rate fluctuations between USD and SGD but that is something I am willing to undertake.
I hope this has helped your journey in finding new ways to work your savings hard and make that extra bit of money which could go a long long way in our personal finance journey.
I have included my Hodlnaut referral code here – please do sign up via this code if you do not have an account currently. You will get a bonus 20 USD if you deposit USD $1000 worth of assets in a single transaction.
And If you are interested in signing up for a Crypto.com account, you can use my referral link and enter the code ‘3jeh7rh65w‘.
These referrals could go a long way in keeping the sustainability of this blog, thank you!
Disclaimer: This article contains affiliate links which goes towards ensuring the sustainability of this blog. This article is only for information and not financial advice and has no regards to any person’s investment and financial needs. This is not a sponsored post and all opinions expressed here are of the author.
