Are there alternatives to fixed deposit that guarantee capital? - Seedly
 

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Asked by Ultimax

Asked 2w ago

Are there alternatives to fixed deposit that guarantee capital?

My parents recently sold their condo but don't want to buy another just yet. They want to keep the money for 2-3 years first. My dad wants to put the money in fixed deposit. He's very afraid of losing any of his capital. Are there alternatives to fixed deposit which pay higher than ~1.5% p.a. for a six figure sum of money? My parents have no problems locking the sum up for 2-3 years. Thanks!

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Some alternatives are:

  • SSBs: No capital loss, liquidity is within a month with accrued interest paid

  • FDs: No capital loss, but early termination will only yield your capital in return

  • Short duration endowment plans: Usually 3 years, with a decent return, but early termination will result in a small financial loss. Probably your best bet if they have no issues with locking the sum up. Best in market now is 2.28% from Aviva.

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Ultimax
Ultimax

2w ago

Thanks! I think these are the main things my parents will be willing to consider. They're quite conservative.
Wilson Nid A Break
Wilson Nid A Break
Level 8. Wizard
Answered 2w ago

Maturing good quality bonds - do your due diligence whether the company is able to repay

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Ultimax
Ultimax

2w ago

Yah, "good quality" is the key. Don't know if I'll be able to convince my parents as they get spooked by finance stuff quite easily haha.

Here are principal guaranteed investments that your parents can look at

Singapore Government Treasury Bills

Singapore Government Bonds

Singapore Savings Bonds (SSB)

Fixed Deposits

CPF Top-Ups

Savings Plans from Insurance companies

I make videos about interesting stuff at youtube here​​​

2 comments

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Ultimax
Ultimax

2w ago

Thanks! This is a pretty good list. I guess it's always a matter of balancing liquidity with returns. I'll look into the endowment plans someone else suggested. Aviva has one with 2.28% p.a., principal assured, and lock in for 3 years.
Ernest Yeam Wee Leong
Ernest Yeam Wee Leong

2w ago

No problem! is a balance between liquidity and returns. low liquidity higher returns is the formula

You can consider the latest 3 year guaranteed endowment policies from Singlife or Aviva at 2.25% and 2.28% p.a respectively.

Just need to make sure you can keep it for the full 3 years.

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Ultimax
Ultimax

2w ago

Yes, this seems to be the best solution at the moment if they can definitely lock the sum away for 3 years. Thanks for pointing it out!
CH
CH
Level 6. Master
Answered 2w ago

6 fig sum probably can consider join premium banking. the bankers will have more solutions. i am not a premium banking client so i will not know how those plans performances are. But I know they do have capital guaranteed solutions.

If, however, you prefer retail solutions, probably you may have to break up into batches of

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Ultimax
Ultimax

2w ago

Thanks very much for your suggestion! I think my parents are quite apprehensive of talking to a RM because of previous bad experiences. They're also wary of sales charges. They rather go for a transparent retail product they can purchase themselves.
CH
CH

2w ago

Totally understand. i am also a victim of so call "relationship managers", "financial advisor", and what not. unfortunately Sg government bonds gives <1.5% currently. so probably those fixed dep which i mentioned are best for now. good luck.