Redefining Cash Management: Simple Guaranteed vs. Fixed Deposits – The Ultimate Comparison
What are fixed deposits?
Fixed deposits – also known as “term deposits” or “time deposits” – are financial instruments offered by banks and other financial institutions. They are a popular, low-risk savings option that allow individuals to deposit a lump sum of money for a fixed period of time at a predetermined interest rate.
How do fixed deposits work?
In a fixed deposit account, the money deposited (also known as the “principal amount”) is locked for a specified tenure, which can range from a few weeks to several years. During this period, the funds earn simple interest at a rate higher than a regular savings account. The interest rate is typically guaranteed and remains unchanged throughout the deposit's term.
At the end of the term, the depositor receives the principal amount along with the accumulated interest. Fixed deposits are considered a safe and stable investment option as they offer a guaranteed return and are not directly affected by market fluctuations like stocks and mutual funds.
What more should I know about fixed deposits?
In Singapore, fixed deposits with better rates come with certain conditions. They usually have minimum and maximum deposit limits, and conditions requiring other interactions with the bank, such as credit card spend, insurance etc. Learn more about the latest fixed deposit rates in Singapore.
As of Feb 2024, here’s what the four biggest banks in Singapore currently offer, along with the restrictions:
| Banks and StashAway | Interest rate | Tenure | Condition 1 | Condition 2 | Condition 3 |
|---|---|---|---|---|---|
| DBS | 3.2% | 12 months | Min $1,000 | Min $19,999 | Any amount above $20,000 receives 0.05% interest |
| OCBC | 3.1% (internet banking) | 6 months | Min $30,000 | No SRS | |
| UOB | 3.1% | 6/10/12 months | Min $10,000 | No SRS | Fresh funds only |
| Citibank | 3.5% | 3 months | Min $50,000 | No SRS | |
| StashAway Simple™ Guaranteed (Cash or SRS Funds) | 3.75% | 3 months | None | None | ...and still none! |
As of Feb 2024, StashAway Simple Guaranteed has the best guaranteed rate in Singapore.
Other popular, low-risk investment options in Singapore are Singapore Savings Bond and T-bills. Here is how they compare:
| Banks/FI | Interest rate | Tenure | Condition 1 | Condition 2 | Condition 3 |
|---|---|---|---|---|---|
| Singapore Savings Bonds | 3.0% | Min 1 year | Min $500 and in multiples of $500 | Max $200,000 | Application and allotment process |
| Singapore Govt T-bills | 3.73% | 6 months | Min $1,000 and in multiples of $1,000 | Application and allotment process |
Across the various low-risk investment options available in Singapore, there are considerable restrictions to access the rates. Since they also tend to be promotional, the same rate is usually not available for reinvested funds.
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