If you want to start investing, one of the accounts that you need to look into is fixed deposit in Singapore.

Also known as time deposits, this is a type of investment that will help you earn interest over a fixed term. When you deposit money into this account, you will not be allowed to withdraw from it until after it matures.

Over this time, the money will earn interest. The interest rate on fixed deposits is higher compared to the rates offered to traditional savings accounts. Once the account reaches its maturity date, you can withdraw the initial deposit and the interest amount that it earned over time.

Of course, the question going through your mind right now is if this type of investment is worth it. To answer that, You need to understand the current market situation in Singapore.

This market is highly influenced by the global market. That being said, you need to be aware of what goes on in the international market. This will allow you to determine or forecast the market trends in Singapore.

According to an article published on StraitsTimes.com, the US Federal Reserve decided to raise their rates for this year. Since their market has a huge influence on the global market, you can bet that it has some effect on our local market.

Fortunately, the article mentioned that the rates of fixed deposit in Singapore might not change – but there are lenders who have expressed that they are still determining if they will change their rates in 2017.

It is also interesting to know that time deposits could become more popular this year, as one article published on ReitsWeek.com suggests. Apparently, the unit prices of the REITs in Singapore are expected to go further down this year. Experts believe that this will lead investors to take on more secure investments – and that includes fixed deposits and bonds.

This is actually a great suggestion that you should consider. Given the volatile market that we are currently having, you may want to consider opting for a low-risk investment like time deposits.

Why should you invest in fixed deposit in Singapore?

The main reason why you should invest in a fixed deposit in Singapore is the security that it will bring. The interest rate will not change even if the market causes the rates to fluctuate. If you want a really low-risk investment, this is the best way to do it. You will be assured of getting your initial deposit back and with additional interest.

Of course, there are a couple of principles that you need to understand about fixed deposits in general.

The risk is proportional to the return.

This is one of the basic principles of investing. The lower the risk, the lower the return. There is nothing illegal about having a low investment risk tolerance. But you have to understand how it will affect your returns. Since time deposits give you a very low-risk, you should not expect too much from it when it comes to profit.

The interest rate will be bigger than a normal savings account. However, it will be quite small compared to the other types of investments that you could make. However, if you are not in the market for profit but you do not want your money to waste away in a saving account, then placing it in a time deposit should be a great idea.

The longer the money stays, the more it will earn.

If you need the money to be liquid at any point in the near future, then you need to consider the terms a fixed deposit in Singapore carefully. You cannot use the money until maturity. Of course, the longer the money stays untouched, the more interest it will accumulate.

For instance, if you decide to put your money in a time deposit for 2 years, it will earn more compared to having it stay for only a year. So weigh the need to have the money liquid against the earnings that you want to get out of this investment. In case you really need to withdraw the money prematurely, you may have to pay a penalty for that.

Are fixed deposit in Singapore worth it?

The answer to this question will depend on your goals for investing in a fixed deposit. Let us first look at the advantages and disadvantages of time deposits.

  • Safe type of investment. This is one of the best investments that will allow you to earn your money without fearing the volatile market. Regardless if the rates in the market go up or down, the interest rate in a fixed deposit account will not change.This is one of the ways you can diversify your portfolio. The government regulates time deposits. The SDIC or Singapore Deposit Insurance Corporation Limited also provides additional protection in case the bank fails or closes down.
  • Higher interest rates. At least, if you compare it to normal savings accounts in Singapore. When you compare it to other types of investments, you will realise that the rate is quite small. But if you are after a very low-risk investment, you know that the rate it offers is worth it.
  • A steady source of income. A time deposit can provide you with regular earnings. You can set it up so you earn on a monthly, quarterly or even yearly basis. You can choose to have the earnings deposited into another account. That way, you can use it without touching the initial fixed deposit. This is actually a great option for retired folks. If you are anxious about how much you need to retire, having a steady stream of income from a fixed deposit account should calm your nerves.


  • Low-income. The low-interest rate means you will have to be content with a very low income from your deposit. That is what you get for the safety that your money will have. With the rates fixed deposit in Singapore quite low at the moment, you might find that investing right now might not be worth it. When the rates are high, sure, go ahead and invest. Of course, if you are really after the security of your money because you are unsure about where the market will turn, then this should be a great investment for your money.
  • Untouchable deposit. Unlike stock investment, you cannot touch this deposit. You can shift to another fund whenever you like. You can only do so after the maturity of the account. If you want to be an active investor, this is not the right option for you. But if you are still learning and you want to minimise mistakes and losses, then that is what you get from this type of investment.

Consider the pros and cons of a fixed deposit in Singapore so you can determine if this is the right option for you. Although the returns are small, do not underestimate the security that this type of investment can bring to your portfolio. Diversity is the key to making your portfolio thrive.

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Adrian Tan is CEO of The Resource Group, a boutique HR Consultancy that focuses on helping SMEs develop their human capital. Before this, he was the MD of RecruitPlus which he co-founded in 2004 and led to two HR Vendor of the Year award. He was named the HR Entrepreneur of the Year by SHRI in 2013. Adrian is passionate about entrepreneurship and HR tech.



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