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Cash is fast losing its value to the inflation monster. As it stands, most countries, including Singapore, are experiencing record high-inflation today. Core inflation in Singapore, which excludes accommodation and private transport costs, rose to 4.8% in July 2022, a 14-year high.
By doing nothing, your cash savings will be worth less and less. Simplistically speaking, you need to earn a return on your savings to limit this situation. One way is by investing in stocks, which can potentially generate higher returns for you. However, the financial market has been wildly volatile in recent months. As such, you may wish to ride out the bear market by staying in cash or choose to dollar-cost average by investing a smaller amount regularly.
Both scenarios may result in the majority of your idle cash being held in low-interest-bearing savings accounts. If, instead, you put your savings in fixed-deposit accounts, you would earn a better return but you might not be able to take advantage of market opportunities without incurring a penalty fee.
Digital brokerage firm, Tiger Brokers aims to solve this problem with a solution that works similar to a savings account (i.e. highly liquid), while generating a return that is close to fixed deposit rates (i.e. much more attractive than a bank savings account).
This solution is called Tiger Vault, which you can find on your Tiger Brokers’ app, allowing you to enjoy the best of both worlds. Here are 6 things you need to know about Tiger Vault.
#1 You Can Earn A Return On All Your Funds Earmarked For Investing
As an investor, you may have earmarked some funds for investing, which could just be sitting idly until you deploy them. Ideally, you would want to earn a return on your money even while you wait for the right time to invest.
Instead of dealing with the hassle of constantly switching your funds between different platforms to earn a decent return, you can now do it on your Tiger Brokers account – using Tiger Vault.
By investing your cash in any of the money market funds offered by Tiger Vault, you earn a better return on your money and you can easily manage and monitor your consolidated funds on the Tiger App.
Tiger Vault also offers an auto-sweep function, so you do not have to worry about whether your funds are earning a return in between trades or after exiting a position. This is because all idle cash will be “swept” to the chosen money market fund to earn you a higher return.
Otherwise, you can also choose to subscribe to a specific investment amount above $1 or the regular savings plan (RSP) option to invest in any of the money market funds on Tiger Vault.
#2 Your Money Is Invested In Liquid Money Market Funds
Your next question would logically be: So, what am I investing in with Tiger Vault?
Tiger Vault has specially curated money market funds within the Tiger Brokers’ app that earn up to 2.4% (yields are estimated based on the current market environment).
Source: Tiger Brokers, (taken as of 5 September 2022)
Given that the goal is to earn better returns on your idle cash, you have to remember that there are some inherent elements of risk, even if they are low. The underlying Tiger Vault funds invest in safe high credit rating bond instruments like government bonds making the risk of a negative return on any one day low.
You can also invest in their multicurrency accounts, currently available in Singapore Dollar (SGD), US Dollar (USD), and with the Hong Kong Dollar (HDK) coming soon! This means you can continue to hold your funds in the currency of your choice, saving you on foreign exchange conversion fees and spreads. However, note that you can only choose a single money market fund for each of the different currency accounts.
#3 There Is No Cost To Subscribe Or Redeem Your Funds In Tiger Vault
Unlike the fees that you usually incur when entering or exiting any investment, there are no subscription, redemption, or interest fees for the purchase of the money market funds under Tiger Vault. Moreover, there are no platform-related fees with Tiger Vault that may typically be charged on other platforms as recurring fees. This means you get to enjoy more returns on your investments.
You can easily identify the return on your money by the 7-day yield, which is net of fees on the app account. Moreover, as there is no lock-in period, you can redeem your funds from Tiger Vault anytime you want, without any penalties. All you need to do is to first redeem your funds in Tiger Vault, which takes T+1 to return to your account – or one day after your transaction date. After that, you can withdraw or cash out from your account as per usual, giving you the full flexibility of your money.
#4 Your Funds In Tiger Vault Constitute As Your Purchasing Power
While the speed of withdrawing your cash from Tiger Vault is attractive, it’s not so important if you actually want to invest using the Tiger App when you see an investment opportunity.
Any funds within Tiger Vault continue to contribute to your purchasing power limit. What this means is that you are still able to buy any stock, options, funds, or even participate in IPOs on Tiger Brokers as though you are holding cash.
Additionally, your purchasing power limit will increase with the interest earned from Tiger Vault for future investment purchases.
You need to note that you can only use up to 99% of your Tiger Vault balances to pay for your investments. The remaining 1% serves as a buffer for NAV fluctuation and foreign currency rate fluctuation.
Additionally, there may be a chance of margin interest being charged when using Tiger Vault to purchase options due to a difference in settlement dates.
#5 How To Deploy Your Idle Cash Into Tiger Vault?
To subscribe to the auto-sweep function on Tiger Vault, simply click on the “Set up” button, which would require you to input your signature (full name). This would ensure your revolving funds with Tiger Brokers will be invested in the chosen money market funds on Tiger Vault. You can choose to pause the auto-sweep function anytime you wish from the Portfolio tab on the Tiger App.
Source: Tiger App (taken as of 5 September 2022)
Otherwise, you could invest in Tiger Vault funds as a lump sum by clicking on the “Subscribe” button and inputting the investment amount or choose to invest a regular sum by clicking on the “RSP” button.
Source: Tiger App (taken as of 5 September 2022)
#6 What Happens If You Want To Use Your “Idle Cash” In Tiger Vault To Invest In Stocks (Or Other Opportunities)
Once you have either activated the auto-sweep function or have subscribed to a particular fund on Tiger Vault, your buying power will be maintained (up to 99%), so you can trade as usual.
Your buying power can be seen at the top of the screen under the Prime Account, as well as by the maximum quantity of units that you can buy when purchasing with cash.
Source: Tiger App (taken as of 5 September 2022)
The Tiger Vault feature is an additional layer of investment that earns you more returns without restricting your trading or investment decisions on other instruments with Tiger Brokers.
Earn Up To 9.9% Cashback When You Grow Your Idle Cash In Tiger Vault
All Tiger Brokers investors who subscribe to Tiger Vault can enjoy earning cashbacks on their idle cash during the promotion period – on top of the returns provided by the cash management account.
The current promotion runs only for a limited period of 9 days between 9 September and 30 September 2022, which will earn you 9.9% cash back on your Tiger Vault investments.
So, Sign Up for a Tiger Brokers account to start using Tiger Vault today!
To access the Tiger Vault on your Tiger Brokers App, remember to update your Tiger Trade App to version 188.8.131.52 and above.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
Any views shared with Prospective Clients (“Prospects”) are suggestive in nature and on a sample basis only. This may also be predicated on assumptions that are made by Tiger Brokers (Singapore) Pte Ltd about the Prospects’ investment objectives and risk profile. Our suggestive and sample views extended to Prospects are not to be considered as recommendations made by the Company. Suggestions provided are also based on information that may be shared by the Prospects, the accuracy and comprehensiveness of which Tiger Brokers is not in a position to verify.
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