The current decline in interest rates would be one of the biggest since 2002. With the low interest rate landscape at the moment, you may be looking to park your money elsewhere or keep more cash in hand.
As enticing and appealing as cash might be, there is a cost associated with keeping it. Even with a modest rate of inflation of 2 per cent, $100 today would only buy $98 worth of goods and services in a year’s time. It gets worse the longer we hold onto the cash. After 10 years, it would only be worth $81 in today’s money. After two decades, it will have lost nearly a third of its value.
Major banks such as OCBC, DBS, UOB and Standard Chartered have all decreased their interest rates.
In the OCBC 360 Account, balances between $50,000 and $70,000 will earn 1.2 per cent interest, down from 2.4 per cent. DBS Multiplier account holders has lowered their interest by about 50%. UOB has also cut interest on the UOB One account in November, and Standard Chartered Jumpstart account has lowered their interest from 1% to 0.4%.
An alternative where we can park our money is in the Singapore Money Market Funds. Money market funds invest in a variety of short-term debt instruments. It offers liquidity like a regular savings account, and returns that are similar to that of a fixed deposit account. This means while investors enjoy an interest rate that is similar or even higher as compared to a fixed deposit, they are still able to deploy their funds as and when it’s required, without the fear of the money being locked up in a fixed deposit.
Benefits of Singapore Money Market Funds include:
#1: Low risk
Most bonds invested in by money market funds are issued by high quality corporations and are short-term in nature, providing liquidity.
#2: Generate higher returns
Investing in these short-term bonds allow investors to earn higher returns than a savings account on their unused investment money.
#3: No lock in period
Investors can access their funds as and when it's required, without the need to worry that their money will be locked up in a fixed deposit. There are also no sales charges incurred!
Although money market funds offer returns that are 0.25% to 1% better than the savings account rates you are earning now, it is still insufficient to beat inflation.
One way we can beat inflation and give your wealth an extra boost is through investing. Unsure of how to get started? Not to worry, the experienced fund managers at AIA can help you grow and maximise your investments through a variety of funds and portfolios that suit you best.
The AIA Invest Easy Plan allows you to make a lump sum investment of a minimum of $12,000 via cash, Supplementary Retirement Scheme (SRS), CPF Ordinary Account or CPF Special Account.
With no bid offer spread, no monthly policy fee, as well as 0% and low sales charge for CPF and cash/SRS investments respectively, your money goes further and is allocated directly into your choice of funds.
Convenient cash-out
Get access to cash without any charges, should the need arise.
Option to top up
Capitalise on opportunities from S$1,000 on an ad-hoc basis or invest your monthly extras from as little as S$300 to reach your financial goals faster.
Hassle-free portfolio management
Adjusting your portfolios has never been easier with automatic fund rebalancing and free automatic fund switching (for cash/SRS investment only).
In the unfortunate event of your death, your family will receive 100% of the policy value. Should accidental death happen in the first year, we will pay out 110% of the single premium paid plus any top-ups and minus withdrawals, or the policy value (whichever is higher) instead.
AIA Invest Easy is designed to have your best interest in mind. You can choose from AIA’s extensive range of investment funds and have your customised portfolio managed by our experienced fund managers who are committed to stretching every dollar in your investment. AIA’s top-performing fund has generated returns of a whopping 14.7%! Want monthly income? Opt for a dividend-paying fund and receive regular income via dividend distribution!
On top of the Invest Easy, AIA also offers a variety of plans that can offer you flexibility and high returns in the low-interest climate today. These include the AIA Smart Flexi Rewards and AIA Pro Lifetime Protector.
The low-interest rate landscape can tempt more to borrow beyond their means, further eroding their savings. Hence, the best way to beat inflation in the current climate is to stay invested, and we are here to help. Contact any of our friendly representatives at Jane Ong District here. Remember, time in the market beats timing the market!
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