I always like it when you guys interact with me whether through my contact form, social media or simply commenting. One particular Reader sent me a link to an article by BizBrunei about this thing called BIBD Aspirasi and asked me what I thought about it. So our local bank, BIBD had an interesting little launching of a “Certificate of Deposit” that allows their customers to have the best of both worlds between their general saver and their fixed deposit. What the heck do all these mean? Well, follow along! But not before our old friend, the Disclaimer:

Disclaimer: This post is based on the author’s personal opinion and shall NOT constitute to being any sort of financial or investment advice. Take what you read with a pinch of salt and know that whichever action you take in terms of this financial product should be from your own understanding and not because some internet blog told you so.

What is a Certificate of Deposit?

A Certificate of Deposit or “CD” is an investment vehicle that works similarly to a fixed deposit or even a bond. There is a fixed interest rate that applies to your sum of money and a maturity date when you may reap your returns.

It’s really just that simple: You put money in, bank gives you a certificate for it, your money gets paid interest compounds annually, at maturity you get your money back plus the profits. There’s usually also a penalty for withdrawing your money before the stated maturity too.

So what is BIBD Aspirasi?

Aspirasi isn’t really a CD in terms of following the formula. At a glance, it’s basically a “savings plan” which gives you an interest of 0.2% if you leave it for at least 180 days before payout day; which seems to be the end of the year. Your profits are prorated if you parked the money for less than a year i.e. 365 days. Unlike conventional fixed deposits and CDs, you seem to be able to withdraw the money at any time. But this withdrawal could mean not being able to get the profits at the end of the year.

Getting started, you need to deposit $500 and pay a one-time $5 subscription fee. Subsequent top-ups are made in $50’s and there are no additional fees. The biggest draw (hah) of this is that every $50 deposited into this program will let you enter a “Reward Program” which is essentially a lucky draw for cash prizes. You need to leave the money in for at least 90 days to be eligible for a chance at the draw.

The complete features and benefits can be found on their website but I’ve screenshot the quick facts for ease to see:

What do I think about BIBD Aspirasi?

I see so many negatives about this plan so I’ll go with that first (don’t worry; there’s a couple of pros too).

1. What… 0.2% interest rate!?

0.2% interest means if you put in $100, you’ll get a handsome return of… 20 cents. That’s right; parking $100 will make you richer by $100.20 at the end of the year! That is if you actually held this deposit for 365 days; otherwise, it’ll be lower. As an investment, that’s really not exciting.

A majority of the cons (for me) of this plan will be related to their profit rate. Here’s the interest rates from BIBD’s site:

2. Inflation will destroy all your gains

Sure, inflation in Brunei was 0.2% in June 2018 but if you’re taking that as a benchmark, you’ll be burned. Very badly. The rest of the world doesn’t have such small inflation rates; for example, Singapore clocked at around 0.6%, Malaysia at 0.9% and the United States is around 2.9% recently.

So what does this mean? It means if your investment gains are easily offset by higher inflation rates, you’ll find it harder keep up with rising cost of goods.

3. Might as well put the money in Fixed Deposit

The so-called “advantage” of this plan is that you may withdraw at any time. But if you want the funds to grow, you’ll have to let it sit for at least 6 months (180 days) in this account anyway. In that sense, you’re better off putting it in a fixed deposit account which gives you 0.45% for 6 months; which goes up to 0.75% in 12 months! If you wanted the 0.2% gains, just one month fixed deposit will suffice as compared to 6.

4. Only $50,000 insured

There’s a little condition in the bottom of the product:

“Depositors of Bank Islam Brunei Darussalam are guaranteed protection up to maximum B$ 50,000 per depositor under the Deposit Protection Order 2010.”

I guess this means if you got $100,000 worth of CDs the extra $50,000 isn’t protected, right?

Then why would you buy into BIBD Aspirasi?

Wow, the product looks pretty bleak huh? Low returns is usually a turnoff for investors; even the conservative ones want to at least beat inflation. But wait! There’s not one, but two saving grace for this product:

1. $250,000 cash up for grabs! …if you’re lucky

The only reason I see anyone would actually go for this is that they like a game of chance. Especially if it’s a chance to win cash prizes! According to the BizBrunei article linked above, you stand a chance to win $2,500 in a monthly draw and $25,000 in a quarterly draw. But beyond this little… gimmick, there’s really no reason for any sort of investor to look at this “CD”.

2. CD is backed by a reputable financial institution

Contrary to popular belief that BIBD stands for “Bank Inda BerDuit” (a Bruneian slang for “Bank without money”), I think that in terms of risk, this investment is pretty low. The reason is that it’s issued by a bank which is trying its best to appeal to the local consumers so they should take care not to screw up, right?

Aspirasi… or Desperasi?

All in all, just from the product fact sheet alone, I personally would not buy into this program. Not only will my funds be “soft-locked” in order for me to reap the profits and chance at getting “rewards”, the 0.2% rate is only slightly better than their General Saver rates at 0.15%. A fixed deposit will do the job better for me in this case.

You’d do well to look into more financial products before committing to Aspirasi simply because the returns can easily be beaten. Well, unless you’re really into lucky draws; then by all means go for it.

I feel that this product is put together like a sofa-bed; not a good sofa, not a good bed.

Conclusion

I think BIBD Aspirasi is a good step forward to give us average Bruneians more choices when it comes to investing and saving. But I feel the “best of both worlds” kind of approach pretty lacklustre especially when buying into each of those worlds would give you better returns. Using a lucky draw as a gimmick will also die out sooner or later; how long can they sustain giving money away? They’re a bank after all and they will need to look at the bottom line.

Regardless, if you think this product suits you, be sure to read the contracts and conditions properly. There may be hidden clauses that I do not know of which may benefit or damage your investment in this CD. Save and invest wisely guys!

A Certificate of Deposit which can build up your savings; it also has the potential to earn higher returns and an opportunity to get rewarded.

BIBD Aspirasi is our helping hand in achieving your greatest aspirations in life. – BIBD Aspirasi excerpt

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