“Rising inflation has not only pushed up the cost of living, but cash held in low-interest bank accounts has effectively lost its value over time.” Wee adds.
make more money work
Besides SSB, what other low-risk investment vehicles or alternative cash instruments can I consider to better utilize my surplus funds? Here are some Lorna Tan, Head of Financial Planning Literacy at DBS Recommendation:
Short-term government bonds: A T-bill is a short-term tradable Singapore Government Securities (SGS), available for six-month or one-year terms. T-bills do not pay interest unlike SSB and SGS bonds. Instead, they are issued at a discount to face value. At maturity, you receive the full face value.
If you can save a year’s worth of money, you can consider investing in 1-year government bonds. Since the duration is long, the risk is set high, so the yield is higher than 6 months.
SGS bonds: These are long-term bonds ranging from 2 to 50 years. You can receive regular interest on your investment every six months from the month of issuance.
For example, if you buy $10,000 worth of a 50-year SGS bond at a coupon rate of 3%, you will receive two payments of $150 each year until the bond matures.
The minimum investment for T-bill and SGS bonds is $1,000.
Time deposit: Banks in Singapore have aggressively increased fixed deposit rates in parallel with rising borrowing rates. Currently, interest rates on fixed deposits offered by local banks hover around 3% per annum for a 12-month term. says Tan.
How it works is simple. If you make a lump sum deposit over a specified period, you will receive a fixed amount of interest on a regular basis.
https://www.straitstimes.com/business/invest/ssb-t-bill-and-fixed-deposits-how-to-maximise-your-savings-with-low-risk-tools SSBs, T-bills and fixed deposits: how to maximize your savings with low-risk tools