Hi guys, I have a few FDs maturing soon, total funds around 350K. What are the other options to park these funds mid to long term with low risk but offering higher returns than the current FD rates?

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Lee Gek Lan

20 Nov 2020

Financial Consultant at Income

Hi, you mentioned low risk with horizon mid to long term. That will be endowment plans that mature after 10 yrs/more depending on when u hope to get the funds. Or retirement plans. Suggest to look into insurance endowment or retirement plans as insurance plans provides protection coverage of life , TPD on top of giving you savings principal returns+bonus upon maturity

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Elijah Lee

19 Nov 2020

Senior Financial Services Manager at Phillip Securities (Jurong East)

Hi anon,

If you prefer low risk instruments, then you will have to look at instruments that are either guaranteed or do not have stocks as the underlying assest.

I also note that you intend to park the monies for mid to long term. I will ask however, do you require the funds to be liquid or are you okay to leave them parked for upwards of 5 to 10 years? (This is the time horizon you are looking at when you talk about mid to long term)

Next thing to look at would be the purpose of these monies. Do you intend to fund your retirement with these monies? Or is there some other purpose.

If you intend to fund your retirement with these plans, then you can look at ensuring that your CPF SA is maximized. Top up to FRS if you have not (and enjoy some tax relief while you are at it). Beyond that, retirement income plans from private insurers will also provide decent returns in this low interest rate environment. Perpetual income plans are also available if you intend to both use these monies for retirement and also pass the monies on to your children (if any) as part of estate planing purposes. If you are ok with short term, there are 3-year endowments with decent guaranteed yields, which you can keep 'rolling'. All options that I have mentioned will be risk-free as they have guarantees build into them.

On the risk side, you can look at bond/bond funds. The retail bond market in Singapore does not have a lot of selection, so a bond fund might be a better option. However there will be some level of volatility you have to put up with.

It might be better to look at planning for the mid to long term as a whole, taking into account your other assets, in order to better allocate these funds.

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