The Ultimate Guide On Short-Term Savings In Singapore

Updated as at 09 April 2023

Let’s answer the question: “Where should I park my cash savings and what is best for me?”

Defining the scope:

Before we begin, let us first define the parameters of the discussion, starting with the definition of short-term savings.

For the purpose of this discussion, short-term savings will be defined to be cash that is to be used for emergency purposes or non-negotiable items (i.e., property & marriage) and or have a duration of only 1 to 5 years.

We will be examining and ranking the instruments based on the following metrics:

the expected yearly rate of return
exposure to Interest Rate / Re-investment Risk
withdrawal flexibility
cap on savings amount (if any)
ease of earning the interest return

Assessing the instruments

Now that we’ve defined the parameters of the discussion, let us examine each of the instruments that we can use to grow our short-term savings.

I’ll be providing a brief description of what each of the instruments is, its pros and cons, and my personal opinion on the instrument and what it is suitable to be used for.

High-Interest Savings Account

Fixed Deposits

Promotional Endowments

Singapore Treasuries

Singapore Government Savings Bond

Money Market Funds

Summary

Not all “short-term” savings instruments are created equally, it is important that we understand the nature of the different instruments and what they are designed for to purposefully allocate our cash savings into the right instrument depending on our need for interest return, the flexibility of withdrawal and interest rate risk tolerance.

Personally, for my:

expenses & emergency savings, I will park them in the high-interest savings account
short-term savings of less than 2 years, I will park it in either treasuries or fixed deposits
general savings of more than 2 years, I will park it in Singapore Government Savings Bond

For a horizon of above 5 years, you may want to consider investments as an option. With interest rates at such low levels, investing had become a necessity rather than a luxury.

As consumers, we cannot afford to just idle our savings and watch them get eroded by the inflation rate over time. There is a sense of urgency to put our savings to work if we want to achieve our financial goals in the next 10-20 years.

You can learn more about how you can design, implement and manage a fool-proof financial plan that will help you accelerate your financial freedom progress by downloading a copy of my e-book: "The Price Of Financial Freedom” which will provide you with a comprehensive guide to help you achieve financial freedom and live life on your terms in the shortest amount of time.

If you do not know how to get started with your financial planning or if you do not have the time to manage your finances, you can consider engaging an Independent Financial Advisor who can help you make sense of the market, accelerate your progress and achieve financial freedom by 5 to 10 years earlier!

To find out more information about how you can benefit from my financial and insurance planning services, you can check out what I do on my website here:

Daniel is a Licensed Independent Financial Consultant with MAS and a Certified Financial Planner (CFP®).

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