For a conservative and risk-averse person, is putting my spare cash in fixed deposits a good idea? Saw that CIMB is giving 1.84% interest for locking in my funds for 1 year, any opinions? ? - Seedly
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Anonymous

Asked on 14 Sep 2018

For a conservative and risk-averse person, is putting my spare cash in fixed deposits a good idea? Saw that CIMB is giving 1.84% interest for locking in my funds for 1 year, any opinions? ?

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Richard Woon Tian Jun
Richard Woon Tian Jun
Level 7. Grand Master
Answered on 03 Apr 2019

Kinda late to the game, but I think everyone's echoing the same idea: SSBs are the way to go! CIMB's 1.84% interest rate is nothing compared to the 1.95% starting interest rate currently for Singapore's May 2019 issue SSB, accelerating to 2.49% by year 10!

If you were to compare liquidity, you could put your $500 in an SSB today, and withdraw a few days later, with all $500 safely back into your bank account. That's the government's guarantee! For FDs, tough luck - you're locked up for the entire period, so you won't be seeing your spare funds at least for a year.

Comparing default rates - you don't even need to think about it. Singapore is one of the safest places to buy bonds from, given it's large budget surplus and prudent spending strategy. What is a bank's ability to pay compared to Singapore's?

There is good reason why people call SSBs "fixed deposits on steriods". Stronger rates, unrivalled liquidity, and almost 0 default rate, you can see the strength of SSBs appeal. And all you need is a CDP account, and be old enough to drive. I hope this helps you in your journey!

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Jason Sin
Jason Sin
Level 8. Wizard
Answered on 15 Sep 2018

Singapore saving bond is another good option for you to consider.

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Jasmine Tsoi
Jasmine Tsoi
Level 4. Prodigy
Answered on 15 Sep 2018

I think it also depends on the amount of funds you have? Rather than locking it up for one year for less than 2% interest rate, you can consider putting your capital in a bank account that would work best for you? For example if you have a high capital of 70k you can consider the UOB one account which can get you more than 2% if you fulfil their 2 criterias of min spend on card or salary/3 giros. It's also more fluid so if you need the cash anytime you can take it out! Otherwise if it's spare cash I think Singapore savings bonds is also a good risk free investment where you can just park the money there for up to ten years.

Alternatively sometimes you get random products in the market like the recent great eastern/OCBC fixed deposit promo where you place your money for 3 or 5 years and get 2.xx% back. Sorry I can't remember the figure off hand but I think they came up with 2-3 of such products recently!

My personal thinking is that anything that requires me to lock up money for a period of time should get me more than what my bank account can get me. Which is usually more than 2%.

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Jay Liu
Jay Liu, Diploma in Accountancy at KHEA
Level 7. Grand Master
Answered on 15 Sep 2018

Go ahead if you only want to keep it for a year. If you want that poll of money to put in an FD again after it finish, I suggest you put in SSB's for 10 years and the step up interest. Capital guaranteed, backed by government.

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HC Tang
HC Tang, Financial Enthusiast, Budgeting at The Society
Level 9. God of Wisdom
Answered on 15 Sep 2018

The cimb 1.84% is only if you start in September their anniversary month and min 10k.

If you are a salaried workers and credit salary and use DBS / POSB credit card , can also get similar interest.

Why not use SSB where it is usually 2.1 something and above and almost consider guaranteed.

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Nicholes Wong
Nicholes Wong
Level 8. Wizard
Answered on 14 Sep 2018

Singapore savings bonds also not bad if you want put for long terms. Super long term until your retirement age you can even top up your cpf special account and earn at least 4% but you cant withdraw it until you reach the age. 1 year 1.84% still not bad though. Just giving you alternative if you are willing to put longer.

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