You will compare four real savings options on the same basis and pick the best fit for one sum.
Farah has S$20,000 she will need in about six months, for the deposit and first months' rent on a new flat. She has four options open: two banks' fixed deposits, the current SSB and the next six-month T-bill. Each is advertised in a different way, with a different term, different conditions and a different date for getting the money back. Looked at one by one, they are hard to rank. On one sheet, the answer takes a few minutes.
Allow about 25 minutes. Every rate below is made up for practice. When you do yours, use current figures from MAS, the banks and SDIC, and note the date you checked each one.
Include two fixed deposits, the latest SSB issue and the latest six-month T-bill cut-off yield.
For the deposits, pick two that you could actually place: either two banks, or one promotion and one ordinary rate. For the SSB, use the schedule MAS publishes for the issue currently open. For the T-bill, use the most recent six-month cut-off from the MAS auction results. That is a past figure, so treat it as a guide to the next auction rather than a promise.
Farah's made-up four are: Bank A's six-month fixed deposit at 2.9% a year, Bank B's six-month promotion at 3.05% a year for fresh funds only, the current SSB with a first-year rate of 2.4%, and a last six-month T-bill cut-off of 2.7%.
A fair comparison uses the same sum, the same term and a yearly rate for each. Use one sum for all four. Farah uses S$20,000. Use one term, the one that matches your need: six months here.
Then turn each rate into dollars for that sum and term.
Bank A pays 2.9% a year for half a year on S$20,000, which is S$290.
Bank B pays 3.05% a year for half a year, which is S$305, if she meets the fresh funds condition.
The SSB pays its first-year rate of 2.4%, with the first interest payment after six months, so on S$20,000 that is S$240. If she redeems after that payment, the money arrives the following month.
The T-bill at a 2.7% cut-off is priced as in lesson 4.1, A T-bill pays its interest up front as a discount. A 182-day bill with S$20,000 face value costs about S$19,734.32, and the interest is about S$265.68.
If an option's term does not match yours, note it rather than forcing it. A twelve-month deposit for a six-month need is not a fair entry unless you plan to break it, and then lesson 5.3, Breaking a deposit early, tells you what you would actually get.
Rate is one row. Add four more for each option.
Conditions. Bank B needs fresh funds. Bank A has a minimum placement. The SSB has an application window and holding limits. The T-bill needs a CDP account and an application before the bank's closing time.
Early access. Both deposits can be broken, with the interest loss from lesson 5.3. The SSB can be redeemed in any month at face value, with the cash arriving the following month. A T-bill could only be sold early through the market, which is not practical for most individuals, so treat it as locked until maturity.
Protection. The two deposits are Singapore dollar deposits at SDIC members, insured up to the limit per depositor per member. The SSB and T-bill are Singapore Government Securities.
At maturity. The deposits renew at board rate unless instructed otherwise. The SSB carries on until you redeem. The T-bill pays face value into your bank account on its maturity date.
Highlight the option that wins on rate and the one that wins on flexibility.
On rate, Bank B wins at S$305, if Farah qualifies. On flexibility, the SSB wins, because she can get her money back in any month without losing any of it, though it pays the least over six months.
Now weigh them against the job. Farah's date is fairly firm, and she will not need the money before then. She has fresh funds, because her money sits at a different bank. So she writes: "I will use Bank B's six-month promotion, because it pays the most for a date I am sure of and I meet its conditions. If my move date were less certain, I would use the SSB and accept about S$65 less for the freedom to leave in any month."
A finished sheet has four columns, one per option, and six rows: rate, dollars for your sum and term, conditions, early access, protection and what happens at maturity. Every rate has a source and the date you checked it. Under the sheet is a two-sentence decision naming your choice and the reason. Pick your own sum and term now, and build the sheet with this week's figures.
Complete the four-way comparison sheet for a sum and term of your choice and write which option you would use and the reason in two sentences.
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