Are you looking to earn a higher return from your money? If you find that 0.05% of the interest from a saving account is far from attractive, you have come to the right place. For every $10,000 in the saving account, it will return $5 per year. With that amount, you may not even be able to afford most of McDonald’s value meals!
But, you don’t have to settle for 0.05% of interest. Many other options are available so that you can earn a higher return from your hard-earned money. Let’s look at the available options in Singapore.
Fixed or Time Deposit
The next best alternative to earn higher interest while continue to enjoy capital protection is through a fixed or time deposit. The rates offered by a fixed deposit largely depend on the current economic situation. Currently, the local banks are offering between 0.10 to 1.15% for an amount of $10,000 and a duration of 12 months. That may not sound a lot still. However, a fixed deposit is suitable for those who do not want to take the risk of losing their capital. It is also appropriate as a place to keep the emergency fund.
Money Market Funds
If you are willing to take a small risk on your capital, money market funds may be an alternative to earn a higher return. What is a money market fund? It is a pool of money in which the fund manager invests into relatively lower-risk assets. These assets include government and high-grade corporate bonds.
I will not consider money market funds as a saving tool. It is more of an investment. I define something as saving if there is no fluctuation in the capital. Money market funds do not fall under this category. The potential return on money market funds can go as high as 1.5% per annum. Based on $10,000 of investment, that works out to be $150 of return per year.
Earn a higher return through investment
For those who are willing to put in the effort to learn about the mechanism of financial markets, investing may be an ideal way of earning a higher return. An equity investment portfolio can provide a reasonable return of between 10 to 20% per annum. The value of the investment portfolio will even grow exponentially through the compounding effect.
There are four basic steps to get started with investing. I have written an article on investing which you may wish to read up. Hey, do feel free to check out other articles on personal finance on the website too!
Written by Yanto Wong
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