Fixed deposits also called the time deposits proposed by banks and other financial institutions will allow you to obtain a guaranteed interest for the money you deposit for a specific cycle over a long period. Further, you are not required to do anything to obtain interest; you are obliged to leave your Singapore dollars in the bank for a particular duration to earn a fixed return. In addition, there has been a subsequent FD promotion in 2022 Singapore.
For example, if a bank or a non-bank financial institution has a current growth of 1.25% interest rate p.a. for a cycle of thirty-six months, and you decide to insert a minimum amount of $2, 00,000, the total interest that you will receive at the time of its maturity is $750. After three years of keeping your money with the bank or a non-bank financial institute, you will see your $2, 00,000 turning out to be $20,750. Nonetheless, the interest rates are not very elevated right now before this current pandemic; you can obtain up to 2% p.a. for an SGD fixed deposit. However, the good news is that these accounts are virtually risk-free and have much-elevated interest rates in comparison to savings accounts. Sometimes, in hardships and unexpected situations, you require an emergency fund, which helps you deal with the crisis easily. To build an emergency fund, you need to know what expenses should be included in an emergency fund? Once you understand what should be included, you would be required to manage your funds accordingly.
Merits And Demerits Of Fixed Deposit Account
Let us delve into the pros and cons of investing your money in a fixed deposit account.
Pros
- Guaranteed returns – here the rate of interest in SGD fixed deposits is fixed. Therefore, irrespective of the circumstance in the market, you will still obtain interest as long as you oblige to the cycle and maintain the minimum deposit.
- Low-risk investment – a fixed deposit in Singapore guarantees that you will gain a fixed interest rate for a restricted period. Hence, this implies that there are little or no chances of loss of money.
- Interest earned is not taxable – based on IRAS, interest received from deposits with authorized banks and finance companies licensed in Singapore is not taxable. Hence, gaining full interest.
- Easy application – the application is quite simple, the customer can open a fixed deposit account quickly by applying online. This can be done directly through the bank’s website or via internet banking.
- Convenient account surveillance – the customers are allowed to manage their accounts online with the help of internet banking or via their mobile application. You can easily control your account anytime and anywhere.
Cons
- Premature or early withdrawals forgoes interest – if you wish to withdraw your money before maturity, you will either earn a prorated interest or no interest at all. Moreover, some banks even put penalties for early withdrawal.
- Promotional rates need an elevated initial deposit and a longer cycle – in comparison to board rates; promotional rates provide much higher interest. Nonetheless, some banks ask for higher initial deposits, for example, at least $25,000 to earn 1.4 % p.a.
- Requires a minimum deposit and wait until maturity – here, to obtain a good return, you are required to maintain a minimum deposit amount such as $1,000 and dump the money until maturity.
Now, it is up to you to choose what to opt for, either a best-fixed deposit account or the best high interest savings accounts Singapore. Both have their pros and cons, it is your choice who to go with.
