Time Deposit In Singapore – What Is The Best Way To Invest in Fixed Deposit?When is it ideal to invest in a time deposit in Singapore?

You have a couple of considerations to make this type of investment, also known as fixed deposit, ideal in your particular situation. First of all, you need to have a lump sum money. The more money you can save in a fixed deposit, the higher the returns.

Another thing that you have to consider is that lock in period. That lump sum money that you will invest cannot be withdrawn until after the maturity date. If you know that you will need this money in the near future, you should consider another type of investment. Admittedly, there will be nothing holding you from getting your money. However, you will fail to earn the full rewards of your investment. In fact, you could lose the interest that already accumulated on the deposit.

Finally, you need to consider your investment risk tolerance. If you want a low-risk investment, a time deposit in Singapore is the best way to meet that. It is actually a great way to diversify your portfolio if you are looking for a low-risk investment that can balance your higher-risk investments like shares or equity funds.

Consider your age when investing in a time deposit in Singapore

Time Deposit In Singapore – What Is The Best Way To Invest in Fixed Deposit?Your age will be an important consideration when you are thinking about investing in a fixed deposit in Singapore. If you are young, it is not wise to rely on this investment alone. The interest rate of this investment is too low – it cannot even keep up with the inflation rate. The best way to invest is actually to use it as an addition to your retirement plan.

According to an article published on TheOnlineCitizen.com, the best strategy for this type of investment is to “wait until you retire to spend it.”

Here are some important things that you need to know about investing in time deposits.

  • You start young and invest a portion of your income towards time deposits. In this investment, your money is at its most secure and it is earning interest. While the interest is quite low compared to stocks, it is still higher than a savings account.
  • You should steadily put a portion of your investment in a time deposit. As you continue to earn, you will also continuously invest your money and place it in a time deposit account.
  • You will not touch it until after you retire. That is how you can maximise the growth of the money in your time deposits. Depending on the terms, the money in a time deposit in Singapore will be released in 5 or 10 years. The longer the term, the higher the returns.  Once you get your money, it is up to you where you want to put it. If you want to keep your portfolio diverse, you should keep part of the investment into another fixed deposit account. This way, you get to secure a portion of your retirement money.
  • You want to look for banks that will give you the highest interest rate. CIMB Bank and Maybank currently gives the highest at 0.7% annual interest rate. Both of these banks require a minimum deposit of SGD 1,000.

How much money should I put in a time deposit in Singapore

The main question that you may have right now is how much money should you invest in a time deposit? Once again, your age will come into play.

While you are young, you can put a small percentage of your investment money into fixed deposits. However, as you age, you may want to lower your risk and protect the retirement money that you have accumulated over the years. That means putting more of your money where it can be protected from an unpredictable market.

According to an article published on Straitstimes.com, those between 20-40 years of age should have a wider range of investment options. They are young enough to be able to recover from any losses from a high-risk investment. But when you reach the age of 60 years old and more, the article suggests that you use “CPF and Supplementary Retirement Scheme” and focus on investments that will bring “low but predictable” returns. One of the examples cited is a fixed deposit.

Young investors may frown upon time deposits because they feel like they are not maximising the earning potential of their investment. After all, the interest that you will earn is among the lowest. But you have to know that it is okay to feel cautious of your investment – at least for a portion of it. You can invest your money in high-risk accounts for higher returns but make sure you protect some of it. If you want to balance your portfolio risk, time deposits will make a lot of sense to you.

What are the benefits of a time deposit in Singapore?

Time Deposit In Singapore – What Is The Best Way To Invest in Fixed Deposit?Here are some benefits that you will get from investing in a fixed deposit in Singapore.

  • A portion of your money will stay protected. It does not matter if the market goes down. The time deposit will protect your money as long as it stays there. The invested money will continue to earn as originally expected from the terms of the account.
  • It teaches you to keep your hands off your money. You cannot touch the money in a time deposit until after it matures. In effect, you are saving it from your-overspending-self.
  • You can rely on it as a fall-back. If something terribly goes wrong with the market, you are not completely left without any money. You fixed deposit will not be touched and once it matures, you can rely on it to start your investment journey once more.
  • You are free to open a lot of fixed deposit accounts. It is a great way to save for long-term financial goals. Retirement is not the only thing that can benefit from this. Let us assume that you want to buy a house in 2 years or so. You can put your down payment in a fixed deposit and it will earn a higher interest compared to what it will get from a savings account. You can also use this to secure your children’s college fund or your business capital.

A time deposit in Singapore is actually a great way to boost your financial security because it will be untouched no matter how volatile the market becomes. Sometimes, the slow and steady growth is rewarding enough as long as it makes your overall investment secure.

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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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