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Fixed deposits are traditionally used to invest one’s excess cash or for an upcoming expense in the near term. They offer a capital guarantee and a higher interest rate than a savings account for the period the fund is locked in.
In fact, in the current high interest rate environment, fixed deposits might even generate a return that is similar to that of government-issued bonds. Additionally, it is a product that all levels of investors—from the inexperienced to the experienced—can easily understand.
These elements of a fixed deposit make it a favourable choice of investment for investors who seek safety and shelter during times of market volatility. For such investors, instead of the traditional bank fixed deposit with its lengthy paperwork, deposit requirements and having to queue at a branch, there’s a more convenient option with the introduction of StashAway SimpleTM Guaranteed.
What Is StashAway SimpleTM Guaranteed
StashAway SimpleTM Guaranteed is the newest of the three cash management portfolios offered by StashAway. It offers a guaranteed rate of 3.5% p.a (as of 12 June 2023) for a lock-in period of 6 months. The returns are generated by investing in a fixed deposit with their partner bank. You can also use your Supplementary Retirement Savings (SRS) to invest in StashAway SimpleTM Guaranteed.
As interest rates are reviewed and updated daily (if there’s a change), you can wait for a prevailing rate that you like before locking in your funds. During the 6-month lock-in period, you won’t be able to top up or redeem your funds in StashAway SimpleTM Guaranteed. You can also create as many StashAway SimpleTM Guaranteed portfolios as you want if you like the attractive interest rates and wish to invest more. Simply transfer your funds from your personal bank account to open a new StashAway SimpleTM Guaranteed portfolio.
Upon maturity (i.e., at the end of each 6-month investment period), you will receive your initial investment plus interest. You can either lock in a new rate on StashAway SimpleTM Guaranteed, reinvest your funds in any other StashAway portfolio, or withdraw your funds.
Investors can rest assured that their funds in StashAway SimpleTM Guaranteed are invested in fixed deposits with MAS-licensed banks with a low risk of insolvency. In fact, you can see the name of the partner bank in the StashAway app when you choose to invest, giving you full transparency on your investment.
Read Also: Investing With StashAway: How You Can Build Multiple Portfolios Through A Single Robo-Advisor
How Is Simple Guaranteed Different From Investing In Fixed Deposits Directly
Though your funds are invested in a partner bank fixed deposit via StashAway SimpleTM Guaranteed, it differs from investing directly in a fixed deposit with a bank.
Bank fixed deposits are often tied to various prerequisites, such as a minimum investment amount of between $20,000 and $250,000 or a maximum limit on their fixed deposits, particularly for their promotional fixed deposit rates. However, with StashAway SimpleTM Guaranteed, you can invest as little as $1 without any upper limit. This allows you to invest any amount that you desire without being bound to any particular amount set by the bank.
With bank fixed deposits, you also often have to read through the fine print to understand which promotional interest rate you are eligible for. Such promotional rates may only be available for a limited time, valid for a specified amount, or require you to open a new account or deposit fresh funds. Again, StashAway SimpleTM Guaranteed simplifies this process for investors by allowing you to earn the full interest rate shown on your entire investment with no other conditions.
Source: StashAway
How Is Simple Guaranteed Different From MAS-Issued 6-Month Treasury Bills (T-Bills)
The one close substitute that you can compare the StashAway SimpleTM Guaranteed with is the MAS-issued 6-month Treasury Bills (T-bills).
Firstly, you can invest in T-bills only once every fortnight, while you have the flexibility to invest your cash anytime with StashAway SimpleTM Guaranteed. T-bills also have a minimum investment amount of $1,000, while there is no minimum sum for StashAway SimpleTM Guaranteed. Above all, T-bills come with uncertainty over the rates, which are only determined at the price auction. This means that T-bills can potentially be lower than what was advertised.
How Is Simple Guaranteed Different From Singapore Savings Bond (SSB)
To a lesser extent, you can also compare StashAway SimpleTM Guaranteed with the Singapore Savings Bond (SSB). The SSBs, which are offered each month, have a 10-year maturity period, though they can be redeemed in any month before the maturity date. However, the one downside of the SSBs is the possibility of not getting your full allocation, which is limited to a maximum holding of $100,000 when the rates offered are attractive. This would not be an issue with the StashAway SimpleTM Guaranteed, as there is no maximum limit and you do not have to compete with other investors to get the allocation at the rate that you want.
Leveraging StashAway’s Comprehensive Suite Of Investment Options
As the first digital wealth management platform to obtain a full capital market licence in Singapore, StashAway leverages technology to make it simple for investors to access high-quality funds at a fair price and provide a simple and convenient digital experience. This enables StashAway to offer personalised portfolios based on your risk profile, investment objectives, and investment horizon at affordable fees.
Depending on your time horizon, investment amount, risk you are open to, you can consider other investment portfolios for potentially higher returns.
For instance, if you wish to grow your portfolio by investing in a mix of equities and bonds ETFs, you could look at the following portfolios offered by StashAway:
- General Investing powered by StashAway
- General Investing powered by BlackRock
- Responsible Investing with ESG
- Flexible Portfolios
- Income Portfolio
- Thematic Portfolios
For Accredited Investors, you can also access private equity and venture capital funds, angel investing deals, invest in cryptocurrencies and receive personalised wealth advisory services with StashAway Reserve.
Otherwise, if you just want a simple way to safeguard your cash savings while earning a decent return, you can invest in one of the three cash management portfolios offered by StashAway, such as:
Check out the latest rates on StashAway SimpleTM Guaranteed or any of its other equities and bonds ETF portfolios.
StashAway is a brand of Asia Wealth Platform Pte Ltd (201624878Z), which is licensed by the Monetary Authority of Singapore (CMS100604).
This advertisement is not and does not constitute or form part of any offer, recommendation, invitation or solicitation to purchase any financial product or subscribe or enter any transaction.
This advertisement does not take into account your personal circumstances, e.g. investment objectives, financial situation or particular needs and shall not constitute financial advice. You should consult your own independent financial, accounting, tax, legal or other competent professional advisors.
The post Investing In Fixed Deposits: How StashAway Simple Guaranteed Locks In A Fixed Return As Markets Become More Volatile appeared first on DollarsAndSense.sg.
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