As global uncertainty persists and investors search for safe havens, Singapore’s financial markets continue to absorb waves of capital. One clear indicator? The 3-month Singapore Overnight Rate Average (SORA), a key benchmark of short-term borrowing costs has been sliding steadily. Recently, it hovers around just 2.10%, far below what some might have anticipated.
For savers and investors, this raises a pressing question: Should we still bother with fixed deposits, or are there better alternatives out there?
Why I Don’t Use Fixed Deposits
Personally, I don’t park my money in fixed deposits and I don’t have a favorite bank for them either. My reasons are simple:
-
Low interest rates
-
Lack of flexibility: Money locked in for 6 to 12 months might earn a bit of interest, but what if I suddenly need access to those funds? That rigidity doesn’t suit me.
Instead, I’ve structured my finances in a way that balances liquidity, safety, and growth — while also aligning with my personal risk appetite.
Where I Actually Park My Cash
Here’s a breakdown of where I put my money — and why each choice makes sense for me:
Emergency Fund & Daily Liquidity
1. Mari Invest SavePlus This isn't risk-free, but I view it as very low risk and highly liquid, which is perfect for emergency cash. It offers relatively higher yields compared to traditional savings accounts.
2. Standard Chartered JumpStart Account This is another place I hold liquid funds — useful for daily spending and quick access. With decent interest, it's a straightforward, fuss-free place to hold cash.
Long-Term, Safe Growth
3. CPF Special Account (CPF SA) I sometimes top up my CPF SA on the last day of every month, taking advantage of the high, guaranteed interest rate. While retirement is still a long way off for me, I believe in the power of compound interest. Over time, these consistent top-ups can add up significantly.
Medium-Term, Safe Investments
4. Singapore Savings Bonds (SSBs) I used to buy SSBs when interest rates were more attractive. They’re great for low-risk investors who want flexibility. However, with yields now lower, I’ve stopped buying new tranches. I’m holding onto what I have, but I’m no longer adding to this position.
Higher Risk, Higher Potential
5. Stocks & ETFs I do invest in equities, but I keep my exposure capped at 30% of my net worth. My reasoning is straightforward — while stocks can offer high returns, they come with high volatility. I only invest what I’m comfortable losing.
Some of my current holdings include:
-
TLT: iShares 20+ Year Treasury Bond ETF — a bet on interest rates falling.
iShares 20+ Year Treasury Bond ETF (TLT)
-
TLH: Another bond ETF for exposure to medium-term U.S. treasuries.
iShares 10-20 Year Treasury Bond ETF (TLH)
-
SOXS: A leveraged inverse ETF that benefits when semiconductor stocks fall — highly speculative.
Direxion Daily Semiconductors Bear 3x Shares (SOXS)
-
OXY (Occidental Petroleum)
Occidental (OXY)
-
RC (Ready Capital)
Ready Capital Corp (RC)
-
Pfizer (PFE): A pharmaceutical company.
Pfizer (PFE)
These are higher risk, but I approach investing in stocks like a hobby — something I enjoy and learn from. If it goes well, great. If not, I’ve only allocated a portion I’m comfortable losing.
Rethinking the “Rule of 100”
Some advisors advocate the "Rule of 100" (or 110) — subtracting your age from 100 to determine what percentage of your portfolio should be in equities. The idea is that younger investors can afford more risk.
Personally, I don’t follow this rule.
Stocks are not guaranteed to go up, and picking the wrong ones can set us back years. I prefer peace of mind. So, regardless of age, I cap my stock exposure at 30%, with the rest in safer, income-generating or capital-preserving assets.
Final Thoughts
As SORA continues its downward trend, traditional fixed deposits become even less appealing. But that doesn’t mean I should let my cash sit idle either.
By building a personalized strategy that reflects my risk appetite, goals, and need for liquidity, I can make my money work harder even in a lower-rate environment.
Comments