Top Fixed Deposit Rates in Singapore offer 3.50% yield – Higher than T-Bills after this week’s auction (Sep 2024)

As you would probably have heard by now.

At the most recent T-Bills auction this week, T-Bills yields continued their sharp drop to 3.13%.

Charted below, this continues a sharp drop in yields the past 4 auction.

With that in mind, I wanted to explore alternative options to T-Bills.

3 issues I wanted to discuss:

1. Top Fixed Deposit Rates in Singapore (Sep 2024)
2. What are the options other than Fixed Deposits?
3. Where would I put my cash?

Top Fixed Deposit Rates in Singapore (Sep 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 – for fixed deposits.

Tenure	Best fixed deposit interest rate (September 2024)	Bank
3 months	3.35%	Bank of China / ICBC
6 months	3.10%	Bank of China / ICBC
12 months	3.20%	DBS/POSB

It’s frankly quite unusual that you can get a higher interest rate for 12 months than with 6 months, given all the interest rate cuts that are priced in by the market.

But what can I say, sometimes the market is inefficient like that.

Best Fixed Deposit Rates yield 3.50% 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 for better interest rates.

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 are slightly higher than the retail fixed deposit rates you see above.

If you use Syfe Cash+, these are the latest interest rates:

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

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

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

You can see with the drop in T-Bills yields this week, they have come down significantly and are very much in line with fixed deposits now.

	3 months	6 months	12 months	Risk Free
T-Bills yields (29 Sep auction)	NA	3.13%	2.95%	Yes
Fixed Deposit (direct to bank)	3.35%	3.10%	3.20%	Yes (if below $100,000 SDIC limit)
Syfe Cash+ Guaranteed (Institutional Fixed Deposit Rates)	3.50%	3.20%	2.90%	No
Money Market Funds	3.5% – 3.6%			No

Best Fixed Deposit Rates yield 3.35% – if you deposit directly with the bank (as of Sep 2024)

In any case, 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
Bank of China	3.35%	3 months	S$500
	3.10%	6 months	S$500
	2.90%	9 months	S$500
	2.80%	12 months	S$500
ICBC	3.35% (New customers)	3 months	S$50,000
	3.25% (mobile placement)	3 months	S$500
	3.10% (mobile placement)	6 months	S$500
RHB	3.25% (mobile placement)	3/6 months	S$20,000
	3.05% (mobile placement)	12 months	S$20,000
HSBC	3.20%	3 months	S$30,000
	3.15%	6 months	S$30,000
DBS/POSB	3.20%	12 months	S$1,000 (max S$19,999)
	3.10%	9 months	S$1,000 (max S$19,999)
SBI	3.15%	6 months	S$50,000
	2.70%	12 months	S$50,000
CIMB	3.05%	3/6 months	S$10,000
	2.75%	9/12 months	S$10,000
Maybank	3.00% (deposit bundle promotion)	12 months	S$22,000
Hong Leong Finance	3.00%	6/7 months	S$50,000
	2.95%	11/12 months	S$50,000
OCBC	2.90% (online)	6 months	S$30,000
Standard Chartered	2.90%	3 months	S$25,000
UOB	2.70%	6 months	S$10,000 (fresh funds)
	2.60%	10 months	S$10,000 (fresh funds)
Citibank	2.65%	3/6 months	S$50,000

What are the options other than Fixed Deposits?

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:

4.20% on first $20,000 if you deposit to Chocolate Finance

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

Long story short is that 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 some 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.

GXS Bank – 3.48% p.a. yield for 3 months

Alternatively 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 and in line with the best institutional fixed deposit rates above.

I might actually park some cash here myself.

Money Market Funds like MariInvest yield about 3.58%

I’ve been getting quite a few questions on MariInvest so I’ll probably do a deeper dive.

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

Currently it’s paying about 3.58% 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 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.

If you don’t already have a Maribank account you can use the referral code below: 4KCZ19ZJ

This gets you an extra $5 cash as long as you make a Shopee purchase with your linked Maribank account within 14 days of account opening.

Increase the duration:

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

Follow Financial Horse to avoid missing any post!

• Telegram Channel (or Telegram Group)
• Facebook
• Instagram
• Twitter

I also send out a newsletter at 10am every Sunday – rounding up the posts from Financial Horse for the week. Sign up below!

Bond Funds

For most retail investors the best way to do this is to use a bond fund.

There are many options these days from the various Robo Investors.

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.

You can also use something like Nikko AM SGD Investment Grade Corporate Bond ETF, which is listed on the SGX-ST.

What are the risks of investing in a bond fund?

A lot of you have asked what are the risks of investing in a bond fund.

If you pick an SGD hedged bond fund (and you should), then the FX risk is hedged away.

And because the bond funds are broadly diversified, this means the single issuer risk is also diversified away.

The key risks you take on (that cannot be easily diversified/hedged) are:

1. Macro risk – bond defaults due to recession
2. Interest rate risk – capital losses from rising interest rates

That’s just a risk you have to be comfortable with for these bond funds.

As of today, I would say for a low-risk bond portfolio you’re probably looking at about 4%+ yield, but the risks are definitely higher than pure cash instruments.

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.

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 (3.5 – 3.6%)	Good	Low – Moderate
T-Bills (6-months)	Average (3.13%)	Low (cannot exit before maturity)	Risk Free
Fixed Deposit	Average (3.1 – 3.35%)	Average	Risk Free if below SDIC limit ($100,000)
Singapore Savings Bonds	Average (can lock in for 10 years) (3.06%)	Good	Risk Free

For new cash that I have – it’s generally been mixed around the options above, with the exception of T-Bills and Fixed Deposit

Why no T-Bills?

As shared last week – With the latest Singapore Savings Bonds yielding 3.06% locked in for up to 10 years, I actually thought that was a decent buy vs T-Bills.

I myself applied for a decent chunk of that instead of T-Bills given the falling interest rates.

With the sharp drop in T-Bills yields to 3.13% (only 0.07% higher than Singapore Savings Bonds), I guess that turned out to be the right decision.

Why no Fixed Deposit?

Fixed Deposit – as you can see the latest rates below are not amazing.

Tenure	Best fixed deposit interest rate (September 2024)	Bank
3 months	3.35%	Bank of China / ICBC
6 months	3.10%	Bank of China / ICBC
12 months	3.20%	DBS/POSB

I don’t have an account with many of these other banks (other than the usual DBS, OCBC, UOB etc), so the thought of opening a new account just for a slightly higher 0.1% interest rate sorta puts me off.

I’ve just been parking the rest of the cash in a mix of the following:

• Bond Funds
• Money Market Funds
• Chocolate Finance
• High Yield savings accounts

With GXS bank paying 3.48% on $30,000 for 3 months, I’ll probably tap on that as well.

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 split between the various options above – I set out a simple framework below to approach the issue.

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 (because the money only comes back at the start of the next month).

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 30 Aug 2024 and will not be updated going forwards. My latest views on markets, my Stock watchlist and full Personal Portfolio, are shared on FH Premium.

---

Follow Financial Horse to avoid missing any post!

• Telegram Channel (or Telegram Group)
• Facebook
• Instagram
• Twitter

I also send out a newsletter at 10am every Sunday – rounding up the posts from Financial Horse for the week. Sign up below!