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Fixed Deposits

Beginners’ Guide To Fixed Deposits In Singapore

With relatively low interest rates, why do fixed deposits still exist in 2018?

 

Fixed deposits offer us a way to earn guaranteed returns on our money that are higher than a savings account, while still being virtually risk-free. Deposits with all full banks and finance companies in Singapore are also covered under the Deposit Insurance Scheme, insuring up to $50,000 of your deposits in each account.

Advantages Of Fixed Deposits

The simplicity of fixed deposits make them popular among our parents’ generation, since you don’t need any skill, luck, or experience to make money from fixed deposits. You give your money to the bank, and they banks gives you interest and your principal back after the tenor is up.

Fixed deposits can be interesting for investors looking to build a foundation of stable assets that guarantee their principal and returns, so they would be in a better position to make higher risk, higher return investments like stocks, properties, peer-to-peer lending, or even cryptocurrencies.

They are also useful for sums of money you absolutely cannot afford to lose to the fluctuations of the market, such as money set aside for renovations, education, or down payment for a car.

Read Also: 4 Risk-Free Investments That Singapore Investors Should Not Overlook

Disadvantages Of Fixed Deposits

Obviously, you will be giving up liquidity when you place money in a fixed deposit. This means that if you do need that money urgently before maturity, you’ll receive little or no interest.

Interest rates for fixed deposits are also relatively low, even compared to other risk-free investments like Singapore Savings Bonds. However, with interest rates rising across the board, fixed deposits could be making a comeback.

Read Also: [2018 Edition] Complete Guide To Buying Singapore Savings Bonds

Which Bank Offers The Best Rates?

This is a little tricky to determine, since banks have board rates for fixed deposits that don’t change much, and promotional interest rates that can change on a monthly basis. Obviously, you should take advantage of the prevailing promotional rates at the point you wish to make your fixed deposits.

The rates also differ depending on the amount of money you’re depositing. You shouldn’t commit more money just because you want to hit the next interest rate tier, but rather, consider how much you plan to set aside, and look for the bank with the best rates at your desired deposit amount.

To get you started, here is a good list of banks to get your started, listed in alphabetical order.

Bank of China: Board Rates

CIMB: Board Rates/ Promotional Rates

Citibank: Board Rates

DBS: Board Rates

HSBC: Promotional Rates

ICBC: Board Rates/ Promotional Rates

MayBank: Board Rates/ Promotional Rates

OCBC: Board Rates/ Promotional Rates

RHB: Promotional Rates

Standard Chartered: Promotional Rates

UOB: Board Rates/ Promotional Rates

Read Also: [Beginners’ Guide] How To Start Investing In Singapore

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