Qns:You saw four advertisements from four banks: OCBC – 8.2% annual interest rate UOB – 8% annual interest rate compounded monthly HSBC – 8.1% annual interest rate compounded semi-annually DBS – 8.1% annual interest rate compounded quarterly. Which bank would you put your money in? Why?
Ans:
I would put my money into UOB.
Let do some mathematical sum. Assuming that I have $100, and no more money is to put in after that $100 and that I will calculate only half a year.
If I put my money into OCBC, I would have gained $4.10 from the interest, which adds up to $104.10.
If I put my money into UOB, I would have gained $58.6877822144 from the interest rate that is given by the bank, and when added, it will give me grand total of $158.6877822144.
If I put my money into HSBC, I would have gained $8.20 from the interest rate that is given by the bank, and when added, it will give me a grand total of $108.20.
If I put my money into DBS, I would have gained $16.8561 from the interest rate that is given by the bank, and when added, it will give me a grand total of $116.8561.
When I compared the amount of money that I from the interest that is given by the bank, UOB will give me the most amount of money. It will give me around $60 of interest in half a year while the rest gives me an average of $10. Therefore if I want to make full use of my investment in relying on bank’s interest rate to make more money, I would choose UOB since it gives me the highest money earned compared to the rest.