Top Fixed Deposit Rates in Singapore offer 3.20% yield – Better buy than T-Bills? Estimated yield for next T-Bills auction? (Oct 2024)

Now the next T-Bills auction is on Thursday 10 Oct.

But with T-Bills yields falling to 2.97% at the latest auction, I’m just not sure how attractive T-Bills are anymore.

At 2.97%, after factoring in lost interest, you’re not really ahead by a lot using CPF-OA to buy T-Bills.

And at 2.97%, there are quite a few other cash options out there with higher yields.

3 questions I wanted to discuss today:

1. Estimated yield on next T-Bills auction?
2. Top Fixed Deposit Rates in Singapore (Oct 2024)
3. Where would I put my cash?

Estimated yield on next T-Bills auction is 2.95 – 3.05%? (Thursday 10 Oct)

With the fall in T-Bills interest rates, I’m not sure whether it makes sense for me to continue doing the full T-Bills articles before each auction.

So let me know what you guys think, and if still them helpful / want me to continue those.

But generally speaking, I’ve extracted the high level charts below.

You can see how T-Bills yields at 2.97% are the lowest they have been since mid 2022 (almost 24 months ago).

There has been no news of late that would lead to the market pricing in less rate cuts. 

So generally speaking I don’t think we’ll see a big move in the T-Bills yields 

The wildcard of course is if investment demand for T-Bills suddenly plunges due to lower rates -but for now demand has generally held steady at $14 billion).

Barring any fall in demand, I think we’ll see T-Bills yields stay at the 2.95 – 3.05% range even for the next auction.

Top Fixed Deposit Rates in Singapore offer 3.20% yield (Oct 2024)

The full table is further below in the article, but I’ve summarised the best interest rates for the 3, 6 and 12 month tenures below.

With the fall in T-Bills yields, fixed deposits actually offer higher rates than T-Bills now.

Tenure	Best fixed deposit interest rate (Oct 2024)	Bank
3 months	3.05%	Bank of China
6 months	3.10%	Maybank
12 months	3.20%	DBS/POSB

Wait… DBS offers the highest Fixed Deposit rate in the market today?!

Now I’m equally surprised as you guys that the highest fixed deposit rate in the market today is 3.20% for 12 months.

And it’s offered by none other than DBS / POSB Bank.

And for 12 months tenure, despite all the rate cuts priced in?

Better grab it while it lasts la, because this looks to be mispriced and probably won’t last long.

The catch is that the maximum you can deposit is $19,999.

And you cannot be cheeky and split it up into 2 fixed deposits, because once you hit the $19,999 quota for your account anything beyond that will earn 0.05% (yes I know because I tried it myself).

I parked the full $19,999 into a 3.20% fixed deposit with DBS Bank this week, and I suggest you do the same as well before they revise the rates down.

Update: FYI that if you are a senior citizen (above 55), apparently you get an extra 0.1% in interest – a total of 3.30% for 12 months.

Best Fixed Deposit Rates yield 3.10% if you deposit with Syfe Cash+ (to access institutional fixed deposit rates)

Now the rates above are assuming that you deposit with the bank directly as a retail customer.

Another way to do it is to use Syfe Cash+ Guaranteed.

The way this works is that you park the cash with Syfe, who will then deposit the cash into a bank fixed deposit. 

This allows you access to institutional fixed deposit rates (which may be higher than the retail fixed deposit rates you see above).

However you can see the latest interest rates from Syfe Cash+ below:

• 3 months – 3.10%
• 6 months – 2.85%
• 12 months – 2.60%

And frankly it’s actually lower than the retail fixed deposit rates above, especially for the 6 and 12 months tenure.

For the record these were the Syfe Cash+ rate just one month ago, you can see how much they have fallen in just 4 weeks:

• 3 months – 3.50%
• 6 months – 3.20%
• 12 months – 2.90%

Maybank’s 3.45% headline fixed deposit rate is a promotional rate

Now every time I write one of these articles someone will tell me that Maybank pays 3.45% on their fixed deposit.

Just to clarify, yes 3.45% is the headline rate.

But for every $10,000 you park in fixed deposit, you need to park $1,000 into a Maybank account.

And if the $1,000 earns 0% interest rate, then it brings the effective interest rate down to 3.13%.

So how attractive Maybank is really varies for each investor.

Comparing interest rates for T-Bills vs Fixed Deposits vs Syfe Cash+ Guaranteed across all tenures (Oct 2024)

I’ve tabulated the interest rates for the 3 cash options below.

You can see how actually retail fixed deposit rates are the most attractive today.

I don’t expect this to last long though, so better grab it while it lasts!

	3 months	6 months	12 months	Risk Free
T-Bills yields	NA	2.97%	2.95%	Yes
Fixed Deposit (direct to bank)	3.05%	3.10%	3.20%	Yes (if below $100,000 SDIC limit)
Syfe Cash+ Guaranteed (Institutional Fixed Deposit Rates)	3.10%	2.85%	2.60%	No
Money Market Funds	~3.3%			No

Best Fixed Deposit Rates yield 3.20% – if you deposit directly with the bank (as of Oct 2024)

The full list of Fixed Deposit rates are set out below (bold being the most attractive for each tenure).

After the table I’ll share my views on:

1. Are non-fixed deposit options more attractive?
2. Where would I park my own cash, if not in T-Bills?

Bank	Interest rate per annum	Tenure	Minimum amount
DBS/POSB	3.20%	12 months	S$1,000 (max S$19,999)
	3.10%	9 months	S$1,000 (max S$19,999)
Maybank	3.10% (mobile placement)	6 months	S$20,000
Bank of China	3.05% (mobile placement)	3 months	S$500
	2.85% (mobile placement)	6 months	S$500
	2.80% (mobile placement)	9 months	S$500
	2.75% (mobile placement)	12 months	S$500
SBI	2.90%	6 months	S$50,000
	2.70%	12 months	S$50,000
Hong Leong Finance	2.80%(mobile placement)	6/7 months	S$50,000
	2.65%(mobile placement)	11 months	S$50,000
CIMB	2.75%	3/6 months	S$10,000
	2.55%	9/12 months	S$10,000
ICBC	2.70% (mobile placement)	3 months	S$500
	2.50% (mobile placement)	6 months	S$500
RHB	2.70% (mobile placement)	3 months	S$20,000
	2.60% (mobile placement)	6 months	S$20,000
	2.50% (mobile placement)	12 months	S$20,000
HSBC	2.90%	6 months	S$30,000
	2.80%	4 months	S$30,000
UOB	2.70%	6 months	S$10,000 (fresh funds)
	2.50%	10 months	S$10,000 (fresh funds)
Standard Chartered	2.60%	3 months	S$25,000
OCBC	2.60% (mobile placement)	6 months	S$30,000
Citibank	2.45%	3/6 months	S$50,000

What are the options other than Fixed Deposits or T-Bills?

There’s 2 ways to approach the problem if you want a higher yield.

You can either shorten the duration – in the sense of buying short term instruments.

Or you can increase the duration – by buying longer term instruments.

Shorten the duration – Fintech plays offer good “value”

Tthe Fintech style plays offer good value in this space (in my view).

Here are some potential options to look at.

4.20% on first $20,000 if you deposit to Chocolate Finance (revised to 3.6%)

I wrote a detailed review on Chocolate Finance, so do check if out if you are keen.

Chocolate finance pays 4.2% on the first $20,000, withdrawable instantly.

The funds are invested in a selection of bond and money market funds, and Chocolate Finance will top up any returns if they are lower than 4.2%.

Personally I have cash in Chocolate Finance, but I do want to stress that this is not SDIC insured and not risk free.

I leave it for investors to decide if you are comfortable with the risks (see my full review here).

Chocolate Finance is invite only, but you can use the FH invite link below if you are keen to try it out:

https://share.chocolate.app/nxW9/ep4q7wxp

Now that interest rates have dropped sharply across the board, it makes Chocolate Finance’s 4.2% look much more attractive.

That said I don’t expect this 4.2% to last forever, Chocolate Finance will likely reduce it at some point.

Update (5 Oct): This has now been revised to 3.6% for the first $20,000, and 3.2% for $20,000 – $50,000. I still think the first $20,000 is attractive, but I leave it to investors to decide for themselves.

GXS Bank – pays 3.48% for 3 months (revised to 3.28%)

GXS Bank is running a promotion now.

If you deposit $30,000 for 3 months, you’ll get an effective yield of 3.48%.

GXS Bank being a digital bank means this is SDIC insured, so it’s a pretty good deal.

Update (5 Oct): This has now been revised to 3.28%, which makes this less attractive. However being SDIC insured as a digital bank, it does have its benefits.

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Money Market Funds like MariInvest yield about 3.3%

MariInvest is the money market fund solution by Maribank (Shopee’s digital banking arm).

Currently it’s paying about 3.3% yield after fees.

The bulk of the assets are invested in MAS Bills or other short term cash instruments.

Unlike 6-month T-Bills, these have not dropped in yields as much yet because of their short term nature – but there is little doubt that they will in due course.

So there is no free lunch in this world, and yes money market funds will reflect lower interest rates in time.

Whatever the case, money market funds offer competitive market yields, with the option to withdraw your money anytime with T+1 liquidity.

I’ve been parking some of my cash in money market funds like MariInvest as a replacement for maturing T-Bills of late.

Increase the duration:

The other option, which entails more risk, is to increase duration for a higher yield – by buying bonds.

I wrote a full article on how to buy bonds, so do check that out.

Here’s Syfe Income portfolios for example, with a target yield for 4-4.5% or 5.5-6% (depending on risk level), with a duration of about 4 years:

Endowus has something similar with their Income portfolios.

Latest Singapore Savings Bonds are terrible

Note that the interest rates on the latest Singapore savings bonds are abysmal.

And I don’t mean that lightly.

You’re looking at 2.25% for the first 3 years:

I’ve already loaded up on Singapore Savings Bonds this cycle, and at these rates I don’t see myself buying them.

Where would I put my own cash? If not in T-Bills?

These are the yield options available to me today for a cash / low risk investment:

	Yield (indicative)	Liquidity	Level of Risk?
Bond Funds	4%+	Average	Moderate
Chocolate Finance	Good (4.2% on first $20,000)	Good	Low – Moderate
High Yield Savings Account (Eg. UOB One)	Good (4%)	Good	Risk free if below SDIC limit ($100,000)
Money Market Funds (Eg. MariInvest, Fullerton SGD Cash Fund)	Good (~3.3%)	Good	Low – Moderate
Fixed Deposit	Good (3.2%)	Average	Risk Free if below SDIC limit ($100,000)
T-Bills (6-months)	Average (2.97%)	Low (cannot exit before maturity)	Risk Free
Singapore Savings Bonds	Low (steps up to 2.56% in 10 years)	Good	Risk Free

For the cash I’ve gotten from the maturing T-Bills.

I’ve been parking them in a mix of Money market Funds, Bond Funds, and Fixed Deposits/Fintech plays (eg. Chocolate Finance, GXS Bank, DBS Fixed deposit etc).

What about REITs / Stocks – given that interest rates are going down?

Of course, the other option is to buy REITs / Stocks.

I don’t think this is an apples to apples comparison though.

If someone were looking for a low risk place to park cash, and your answer is to park it in a REIT / Stock – that’s just a whole different level of risk exposure.

With REITs/Stocks you’re always at risk of a market sell-off and capital losses, and it requires a very different mentality / risk appetite.

For what it’s worth, I myself have a decent allocation to REITs / yield instruments, and with the recent rally that portion of the portfolio is up 10 – 15% the past few weeks alone.

That’s been a nice boost for my portfolio returns (see my full portfolio on FH Premium).

General thought process on where to park cash for high yield / liquidity?

But hey, that’s just me.

There’s no right or wrong here

For those of you who are still deciding how much cash to hold, and where to park the cash.

It’s broadly a 2 step process:

1. How much liquid cash do you need? 
2. Rest goes into highest yield options – based on your comfort level on risk

Key question to ask – how much liquid cash do you need?

I would say the key question to ask is how much liquid cash you need, to meet your spending needs the next 6 months.

Think about how much you need to spend.

Then think about how much cash you are expecting to come in over the next 6 months.

The difference is the amount of liquid cash you would need.

So if all of your spending needs are going to be met by your salary, or if a big bonus is coming in – then you can actually run very little liquid cash.

Whereas if you’re going to buy a house, a new car, or a big renovation, you’ll need to plan ahead and have that amount of cash set aside in liquid cash.

Some guidelines on liquidity – better safe than sorry

As a general note I would say don’t be stingy with liquidity.

It’s one of those where it’s better to be safe than sorry. 

So after you run the analysis above – you’ll want to buffer for unexpected scenarios too.

For example a big medical bill that you need to pay upfront, then claim from insurance after. 

A big car repair bill.

A decline in stocks that leads you to want to buy some stocks / REITs.

A loss of job, meaning no income in the short term.

Things like that.

As a general note I would say you always want to have enough liquid cash on hand to cover 6 months worth of expenses, as a worst case scenario.

Liquid Cash should go into options accessible on short notice – savings accounts, fixed deposits, money market funds

Once you have the number above.

That amount of liquid cash, should go into options that you can get back with ideally a day or two’s notice.

That will include:

1. High yield savings accounts (eg. UOB One, OCBC 360) – as a savings account you can withdraw any time
2. Fixed Deposits – can break anytime by telling the bank, although you will lose accrued interest
3. Money Market Funds – they are T+1 liquidity

I would say some Singapore Savings Bonds are fine as you can get the money back reasonably quickly, but don’t overdo it and put 90% of your liquid cash into Singapore Savings Bonds.

Rest of the cash goes into highest yield options – based on your comfort level on risk

Once you have the above – the rest just goes into the highest yielding option you have available to you (see options above).

But… how much cash to hold, vs stocks or REITs or real estate?

Do note that the discussion above only addresses where to put your cash.

It doesn’t address the question of how much cash to hold, vs stocks or REITs or real estate.

That’s a much harder question (that we try to answer on the rest of Financial Horse).

But long and short, I would say it depends on 2 factors:

1. Individual risk appetite
2. Market conditions

Individual Risk Appetite

Individual risk appetite is how much risk you can take.

If you’re a 62 year old approaching retirement, the amount of risk you can take is very different from a 25 year old starting his career.

Life goals matter too.

If you’ve saved up over a lifetime and finally have enough to afford a comfortable retirement, you may not want to put all that into high risk stocks and risk losing it all.

Whereas if your current capital is very low, you might not mind taking on higher risk for the chance to get great returns.

How much risk to take – only you can answer this question for yourself.

Market conditions

The other factor to consider is market conditions.

Yes I know this is market timing and all.

But I would say there are some times in markets like March 2020 or 2008/2009.

That as long as you have enough cash set aside for spending needs and contingencies, it probably makes sense to increase risk exposure given how cheap valuations are.

And vice versa.

But I know not everyone is comfortable with market timing, and some prefer to just dollar cost average regardless of market conditions.

In which case you can ignore this factor and focus on risk appetite above.

This post is written on 4 Oct 2024 and will not be updated going forward. My latest views on markets, my Stock watchlist and full Personal Portfolio, are shared on FH Premium.

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Chocolate Finance- pays 4.2% yield on first $20,000

Chocolate finance pays 4.2% on the first $20,000, withdrawable instantly.

The funds are invested in a selection of bond and money market funds, and Chocolate Finance will top up any returns if they are lower than 4.2%.

I wrote a detailed review on Chocolate Finance (note not SDIC insured).

• FH invite link below:

https://share.chocolate.app/nxW9/ep4q7wxp

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