Fixed deposits are a good way to earn guaranteed returns on our money which are higher than a checking account, while still being virtually risk-free. However, most banks happen to be reducing fixed deposit rates of interest, so that the interest rates earned by Singapore Savings Bonds (SSB) is even greater than most fixed deposits.
Thus, we’ll examine whether or not they still have a role to experience for your investment and budgeting needs.
Advantages Of Fixed Deposits
Simplicity: The simplicity fixed deposits make them well-liked by our parents' generation, since you have no need for any skill, luck, or experience to earn money from fixed deposits. You give your money to the bank, plus they return your principal plus interest following the tenure expires.
Predictable: Fixed deposits can be interesting for investors looking to develop a foundation of stable assets that guarantee their principal and returns, so they would be inside a better position to create higher risk, higher return investments like stocks, properties, peer-to-peer lending, or even cryptocurrencies. Thus, they're helpful for sums of money you absolutely can't afford to get rid of towards the fluctuations from the market, such as money put aside for renovations, education, or downpayment for any car.
Accessible: Fixed deposits can be created with sums of cash less than $1,000 with maturity periods of one month to a couple years. Unlike instruments like SSB, where may be allocated with under what you want to take a position on months where the bond is oversubscribed, you are able to invest as much as you want in fixed deposits. Also, there isn't any cap on how much you can place in fixed deposits, unlike the SSB, that have an individual limit of $200,000.
Safe: Singapore consumers enjoy a tightly-regulated banking eco-system. Additionally, deposits with all of full banks and financial institutions in Singapore will also be covered underneath the Deposit Insurance Scheme, insuring up to $75,000 of deposits in every account.
Disadvantages Of Fixed Deposits
Liquidity: Obviously, you'll be quitting liquidity when you place money in a fixed deposit. Which means that if you do need that money urgently before maturity, you'll receive little or no interest. It's important to note that the amount lost for pre-maturing redeeming your capital is marginal, compared to what you would lose for surrendering other instruments early like endowment plans.
Interest Rates: Rates of interest for fixed deposits are currently relatively low, even compared to virtually risk-free investments like SSB.
Which Bank Offers The Best Fixed Deposit Interest Rates?
This is a little challenging determine, since banks have board rates for fixed deposits that don't change much, and promotional interest rates that may change monthly. Obviously, you need to make use of the prevailing promotional rates at the point you wish to make your fixed deposits.
The rates also differ with respect to the amount of money you're depositing. You shouldn't commit more income just because you need to hit the next rate of interest tier, but instead, consider just how much you intend to set aside, to check out the financial institution using the best rates at the desired deposit amount.
To keep, this is a good listing of banks to get your started, indexed by 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
What To Take Note Of Before Making A Fixed Deposit
After choosing the bank with whom you wish to put your profit, you’ll also need to choose the tenure (duration) you desire. Generally, you can also decide what you want to happen after your fixed deposit reaches maturity, including automatically creating a new fixed deposit together with your principal and interest (rolling over), just rolling over your principal and withdrawing your interest, or withdrawing both principal and interest.
Finally, you should find out precisely what charges and costs you'll incur should you withdraw your fixed deposit early, and just how much interest is payable (if).