For many years, fixed deposit offered by banks have been seen as the best option for one who wants to make their money grow in a conservative manner. However, during the past few years, as the awareness of financial and retirement planning increases, more individuals are channelling their money into various financial Instruments. Today, we shall discuss about these options.
Fixed deposit offers guaranteed returns by banks. Unlike a typical savings account with liquidity, Fixed deposits has a tied down on the account holder at a tenure of 6 months to 4 years. In return, fixed deposit gives a higher interest rate than ordinary saving accounts. Another advantage is that fixed deposit interest gains are not taxable in Singapore. However, based on the rates given by fixed deposit, they are less likely to beat inflation over time and one may lose their coupon pay out in the event of early redemption before the fixed Deposit tenure.
Singapore Savings Bonds are a special type of Singapore Government Securities that is suitable for individuals with low risk tolerance. Lately, we have seen increased popularity among subscribers as their interest rates tend to out beat fixed deposit. Some advantages include redeeming early with no penalty of losing your interest pay out. They are guaranteed by the government and interest gains are exempted from tax. These instruments offer the flexibility of short or long term investment period. Returns are calculated based on a step up interest basis where interest will be higher when kept for a longer period of time.
In summary, if one is looking for a short term time horizon with guaranteed principal at a higher interest rate by a bank savings account, the above two options should work well for you. To get in touch with our guest writer, you may like to PM our hotline at +65 85565271.