Question: I have about $400,000 to invest. I would prefer something safe, what should I do?
Answer:
For capital guaranteed product, I recommend Singapore Saving Bond. First because you can liquidate fast within one month. The capital is guaranteed, and it does not fluctuate with the market. Second, the interest is good – much better than fixed deposits. Third and more importantly, it is backed by the Singapore Government which has the highest credit rating. Singapore is unlikely to go bankrupt.
That being said, last month, the Singapore Saving Bond was oversubscribed, The maximum amount people could get was only $15,000. The disadvantage of Singapore Saving Bond is that the supply is limited.
If you can afford to have some small risk, you can consider short duration bond funds. Short duration bond funds are unit trust which fund invest in bonds with very short maturity of only a few years. The price of such unit trusts does not fluctuate as much as a long duration bonds. The returns are also better than the fixed deposits. However, there is still some risk because capital is not guaranteed.
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Using a combination of safety, interest rates, liquidity, & convenience/effort required, my personal preference order is … SSB, T-bills, money market funds, FDs, higher yielding savings accounts.
As long as Fed is still in aggressive tightening mode, I won’t use short duration bond funds.
This is provided the $400k is really meant as a mindful & considered safety ballast portion of an overall networth allocation, or meant for short term needs within 1-3 years. Else just dumping into the above safe but low-yielding options is a sub-optimal custody of the money.