You will be able to compare the main cash-like options on return, access and what can go wrong.
Mei has S$15,000 set aside for the wedding and it sits in the same savings account as her salary. Daniel's colleague keeps telling him to "just buy T-bills". Her sister swears by Singapore Savings Bonds, and the bank's app keeps offering a fixed deposit promotion. All four are reasonable places for money you will need in a year or two. They differ in what they pay, how you get the money back, and what can go wrong.
This lesson lines them up on those three questions. It gives no rates, because all four change, sometimes month to month. You will look up today's figures in the activity.
A savings account gives you your money the same day, at any time. That is its main strength for a goal with deposits due on dates you don't fully control.
The rate is the part to read carefully. Many accounts pay a low base rate on everything and a higher bonus rate only if you meet conditions, such as crediting your salary, spending a set amount on the bank's card, or holding insurance or investments with the bank. Bonus rates often apply only to a slice of the balance. How money works lesson 1.2, How a bank earns the interest it pays you, worked through one of these offers: an account advertised at over 3% paid closer to 1.5% on the balance in the example.
Singapore dollar deposits at member banks are covered by deposit insurance up to a limit set by the scheme. Check the current limit on sdic.org.sg, as The Singapore personal finance system lesson 3.2, Where to keep it: safe, liquid and separate, explained.
A fixed deposit pays a set rate for a set term, often somewhere between a few months and a year or two. You know at the start exactly what you will have at the end.
The cost is access. If you need the money before the term ends, banks usually let you withdraw, but you lose some or all of the interest. With a made-up example of S$10,000 in a 12-month deposit at 2.5%, the interest at maturity is S$250. Break it in month nine and, depending on the bank's terms, you might get some of that or none of it. Read the early withdrawal terms before you place the deposit, not when you need the money.
That makes fixed deposits a good fit when you know a payment date and can pick a term that ends just before it. Singapore dollar fixed deposits at member banks are covered by the same deposit insurance as savings accounts.
Treasury bills, or T-bills, are short-term Singapore government securities with terms of up to a year. MAS issues them on the government's behalf through auctions on a published calendar.
You don't receive interest along the way. You pay less than the face value at the start and receive the full face value when the bill matures, and the difference is your return. As an example with made-up figures, paying S$9,800 for a S$10,000 one-year bill earns S$200, about 2.04% on what you paid. The price is set at the auction, so you only learn your exact return after you apply.
You usually apply through a bank, with cash, and you can also use SRS money or, under some conditions, CPF savings. Check the current methods, minimum amounts and the auction calendar on the MAS website.
What can go wrong is mostly timing. You can't hand a T-bill back to MAS early. If you need the money before it matures, you would have to sell it to someone else at whatever price they offer. So a T-bill suits money you're sure you won't need until after its maturity date, and you have to plan around the auction dates to buy it.
Singapore Savings Bonds, or SSBs, are also issued by the government, but they work differently. They run for up to ten years, and the interest steps up the longer you hold them, so the yearly return over the full term is higher than over the first year. MAS publishes the rates for each issue before you apply.
The feature that matters most for goals is access. According to MAS, you can redeem an SSB in any month without a penalty, and you get your money back with the interest earned so far. It is not instant, though. You apply to redeem during a month and the money arrives early the next month, so check the timetable on the MAS website. There is a limit on how much each person can hold, and banks charge a small fee for each application and redemption. Look up both on the MAS website before you plan around them.
Because new SSBs are issued every month with their own rates, the rate on the issue you buy depends on when you buy it.
For a short goal, a useful way to compare is to ask three questions of each: what does it pay today, how quickly can I get the money out, and what would I lose if I needed it early?
Savings accounts win on access and lose on rate unless you meet the conditions. Fixed deposits pay a known rate and punish early exit. T-bills can't be cashed early except by selling, and must be bought at auction. SSBs give monthly access without a penalty, with a delay of weeks and a cap on how much you hold. None of them is the right answer for every goal, and many people use two or three for different goals.
For the activity, you'll need the current figures: open your bank's rates page and the MAS pages for T-bills and Singapore Savings Bonds, and keep them side by side.
Fill in a table for the four options with current rate, how to buy, how to get money out and the main risk, using bank and MAS pages.
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