Savings 101: SSBs, Fixed Deposits or Savings Accounts?

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There are many ways to grow the money you have saved. The simplest way is to diversify your funds so as to get the maximum returns. If you are looking at conservative options growing your money, you could choose between a fixed deposit account, Singapore Savings Bonds, and savings accounts with a high interest rate.

Depending on the kind of risk you are willing to take, the amount you are willing to put away, the returns you are looking for, and the liquidity you need, you could choose any of the above methods to get interest on your savings.

Let’s compare each saving instrument and see how they differ

Feature

SSB

Fixed Deposit

Savings Account

Eligibility 18 years and above Usually 18 years, though a few banks may allow minors aged 12 to 15 also to hold an FD account. Usually 18 years, but parents or guardians are allowed to open an account in their children’s name.
Tenor Up to 10 years 3 months to 60 months You could hold a savings account as long as you want.
Interest rate 2% to 3% p.a. 0.10% to 1.45% p.a. for a period of 12 months. May vary depending on promotions. Starts from 0.05% p.a up to 3.88% p.a..
Minimum amount S$500 S$1,000 S$0 to S$3,000
Maximum amount S$50,000 per bond. Any individual cannot hold more than S$100,000 in bonds. Depending on the bank you open the account with, the maximum amount could go up to S$1 million. No maximum amount you can deposit, but some high-interest savings accounts have a limit on the amounts that will earn bonus interest.
Liquidity High Low High
Receipt of interest Every six months Upon maturity Every year/quarter/month
Tax Interest received in not taxable Taxable if not in an approved bank Interest received in not taxable
Loan collateral No Yes No
Premature withdrawal Yes Yes, but you will be charged for it. Yes
Transaction fee Yes, S$2 per transaction It is upon the discretion of the bank Usually none, but a fall-below fee is chargeable if your savings fall below the minimum monthly balance

Why choose a fixed deposit

  • The returns are fixed and stable.
  • Your principal amount remains safe for the locked-in tenure.
  • You earn can earn a higher interest rate than the regular savings account.
  • You do not lose the principal amount even if there are fluctuations in the market. It is protected (up to S$50,000 per person), under the Deposit Insurance Scheme.
  • You could also start a fixed deposit account using foreign currency.

Why choose Singapore Savings Bonds

  • The minimum amount to start a Singapore Savings Bond is quite low.
  • Useful for long-term investment while still maintaining liquidity.
  • This is a safe option for growing your money as it is backed by the Government of Singapore.
  • Your interest rate would go up with time.
  • There is no fee for withdrawal before the locked-in date. SSB allows you to redeem the amount before they issue a new bond in a particular month. In other words, the notice period is one month.
  • This could be your emergency fund or retirement nest egg.

Related: Keep Calm and Invest in Singapore Savings Bond (SSB)

Why choose a savings account

You could easily withdraw from an ATM or use the money through internet banking to pay for online purchases.
High-interest savings accounts like the DBS Multiplier Account or OCBC 360 Account offer you higher rates of interest, thus offering both liquidity and returns

Related: Best High Interest Savings Accounts in Singapore

Where do I save the most?

The simple logic of saving is that the longer the tenure, the higher the interest rates. And the higher the risks, the higher the returns. Since you cannot have everything in life, you might have to part with the money for a longer duration to gain more from it.

All the above-discussed options of saving money serve different purposes at different times in life. You do not have to choose any one of them; you could choose all three to gain benefits as per your requirements. With a clever allocation of your wealth between these options, you could look to a future with stronger savings.

Low-risk investments can be seen as your defense for a more financially secure future. For a good offense, start learning how to invest in the market. Our investing resources are great for beginners and will get your started on the right track.

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