Last Updated on 23, March 2014
No, fixed deposits could be the worst place to save to. Firstly, when you place money with a bank, the bank will always try to ask you to invest in some structured products and "favor of the month. You will be constantly harassed. Secondly, only the amount insured by the Singapore Government is safe. Anything that is not insured is subjected to the credit risk of the bank. Thus, if the bank default, only the amount insured by the government is safe. Thirdly, there exists a risk-less instrument called Singapore Government Securities (SGS) which you can buy that has no risk. This is a bond guaranteed by the Singapore government and it represents the safest instrument in Singapore you can find. The interest rate for SGS is lower than a fixed deposits. However, the higher interest rate from the bank is merely to compensate you for the default risk and the potential to be mis-sold dangerous products when you visit a bank. If you end up being mis-sold or the bank defaults, even if the fixed-deposit earns you 10% in yield you will also not be interested.
My advice is that if you cannot afford to lose your money or you have no wish to be harassed, you may want to consider the SGS. You can speak to a financial adviser if in doubt but remember that financial advisers earns nothing from recommending SGS bonds and hence you are likely to be recommended a commission paying product.
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