Is a Fixed Deposit Account the Right Investment Choice for You?

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Stock that earns 1 to 3% a year is considered boring. That was the mentality back in 2020 when stocks were flying off the roof. However, as the recession worsens, inflation starts to look sticky, and de-dollarization happens faster as we speak. Having certainty with your investment portfolio might just be the right thing for you, that’s why more and more investors are looking into investing in a fixed deposit.

As someone who is looking to invest money in Singapore, it’s important to explore all the options available to you before making a decision. One such option is an FD(fixed deposit) account, which is a popular choice for many investors due to the low risk involved and guaranteed returns.

However, before opening an FD account, it’s important to understand how it works and what to look for in terms of FD promotions and rates in Singapore. In this article, we’ll take a closer look at the various factors surrounding FD accounts in Singapore and help you decide if it’s the right investment choice for you.

Why get an FD Accounts

An FD account is a type of savings account that allows you to deposit a lump sum of money for a specific period of time, typically ranging from one month to several years.

The interest rate offered on an FD account is generally higher than that of a regular savings account, and the longer the deposit term, the higher the interest rate. Unlike a regular savings account, you cannot withdraw money from your fixed deposit account until the deposit term has ended without incurring a penalty fee.

The benefit of having a FD account

One of the main benefits of an FD account is the low risk involved. Since the interest rate is fixed and guaranteed for the entire deposit term, you don’t have to worry about fluctuations in the market that could affect your returns. Moreover, most FD accounts are insured by the Singapore Deposit Insurance Corporation (SDIC), which means that your deposits are protected in the event that the bank fails. 8 1

While most fixed deposit accounts do not combat inflation, fixed deposits can be great in certain cases.

For example, if I am looking to buy a house within the next year or two and need a lump sum. A fixed deposit has a high level of certainty that my money is able to grow at a consistent pace without me having to worry so much unlike the stock market.

Understanding FD Promotions

Understanding FD Promotions

In order to attract customers, banks in Singapore often offer FD promotions that provide additional incentives for opening an account.

These promotions can come in the form of:

  • higher interest rates
  • cashback offers
  • gifts such as shopping vouchers or electronic gadgets.

However, it’s important to read the terms and conditions of these promotions carefully, as there may be requirements that you need to fulfill in order to qualify for the offer.

For example, some promotions may require you to deposit a minimum amount of money or maintain a certain balance for a specific period of time. Others may have restrictions on when you can withdraw your money or may require you to sign up for additional banking products or services. Before taking advantage of an FD promotion, make sure you understand all the conditions attached to the offer and that it aligns with your financial goals.

Singapore’s FD Rates

Singapore Fixed Deposit Rates
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When considering an FD account, it’s important to compare the interest rates offered by different banks in Singapore. The interest rate on an FD account can vary depending on the deposit term, the amount of money deposited, and the bank’s current rates.

With high volatile inflation and a spike in interest rates, the fixed deposit in recent times has been rather inconsistent. That’s why most bank would often change their fixed deposit interest rate to match the expectations.

BankInterest rate per annum TenureMinimum amount
HSBC3.75%3 monthsS$30,000
 3.55%6 monthsS$30,000
 3.10%12 monthsS$30,000
SBI3.75%12 monthsS$50,000
ICBC3.65% (mobile placement)3 monthsS$500
 3.55% (mobile placement)6 monthsS$500
 3.50% (mobile placement)12 monthsS$500
Bank of China3.60% (mobile placement)3/6 monthsS$5,000
 3.5%  (mobile placement)9/12 monthsS$5,000
Maybank3.55%12 monthsS$20,000
 3.40%15 monthsS$20,000
RHB3.50% (mobile placement)12 monthsS$20,000
 3.50% (mobile placement)6 monthsS$20,000
Hong Leong Finance3.50%10 monthsS$50,000
Hong Leong Bank3.50%3/6 monthsS$100,000
Citibank3.48%6 monthsS$250,000
CIMB3.45%9 monthsS$10,000
UOB3.45%6/10 monthsS$10,000
OCBC3.30%6 monthsS$5,000
DBS/POSB3.20%12 monthsS$1,000
Standard Chartered3.00%3 monthsS$25,000

Factors to Consider for Opening FD Account

While interest rates and promotions are important considerations when choosing a fixed deposit account, there are other factors that you should also take into account. For example, some banks may require a higher minimum deposit amount or charge a penalty fee for early withdrawal. You should also consider the deposit term and whether it aligns with your financial goals, as well as the ease of opening and managing the account.

Dollar Time Deposits vs Fixed Deposits

Singapore banks offer dollar time deposits in addition to fixed deposits. These deposits are similar to fixed deposits but are denominated in foreign currencies such as USD or EUR. Dollar time deposits can be beneficial if you want to hedge against currency fluctuations or have a specific foreign currency expense to pay in the future. However, they may have higher minimum deposit requirements and may not be insured by the SDIC.

Is FD Account the Right Investment for You?

A fixed deposit can be a good investment choice for those looking for a low-risk option with guaranteed returns. When choosing a fixed deposit account in Singapore, it’s important to compare the interest rates offered by different banks and to read the terms and conditions of any promotions carefully.

Additionally, consider other factors such as the deposit term, minimum deposit amount, and ease of account management. By taking all these factors into account, you can make an informed decision about whether a fixed deposit account is the right investment choice for you.

If you’re still unsure about whether a fixed deposit account is the right choice for you, speak to a financial advisor or a representative from your bank to get more information. Remember, investing your money is a personal decision that should align with your financial goals and risk tolerance.

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