Should monthly savings sit in the bank or be used to invest for short term goals?

Depends on what the purpose of your savings is.

If you're saving as emergency funds, keep it liquid and keep it close by.

If you're saving for a near-term purchase, you also want to keep it relatively close by and stable. Volatility is a no-go.

If you're saving without an end in mind - i.e., retirement funds - just invest it.

Hi Anon,

Personally, for short-term goals, I wouldn't invest them simply because there won't be enough time to be guaranteed returns. Markets are volatile and it's possible that when you need the money, your investments are at a loss. Also, with a short time horizon, it's unlikely that any positive returns you'll make will be significantly greater than just putting the money in a savings account, barring any erratic price movements. With that in mind, I don't think it's worth the risk.

Instead, I put my short-term savings in insurance savings plans such as Singlife to earn a marginally higher interest than in the bank. That's good enough for me, and seems like a trade-off worth making.

Hope this helps & all the best!

Regards,

thefrugalstudent