Ultimate step-by-step guide to maximise your savings

Level 1 – Start saving

You should set aside at least six months’ worth of your expenses as a rule of thumb. 

An emergency fund is a stash of savings put aside to cover expenses you wouldn’t normally plan for. This may include any unexpected financial surprises in life such as medical emergencies or job loss.

Learn more about how you can calculate how much emergency cash you need, and how you can build your emergency cash.

Level 2 – Optimise your cash

a) Find best savings account 

Our emergency cash should be put aside in an account that is safe to offer us a peace of mind that it will be protected. 

It should also be highly liquid and accessible quickly if we ever need to tap on the emergency cash. 

As such, your emergency fund can be kept in a high-interest savings account offered by one of the banks. 

The savings accounts are insured by the Singapore Deposit Insurance Scheme for amounts up to S$75,000 per bank, offering us an addition layer of protection. 

There are many different savings accounts offerings in the market. Some allow you to earn an interest on your savings in a hassle-free way, while others require you to fulfill certain requirements to earn a higher interest rate. 

Use our cash optimiser tool to find out which savings account allows you to earn the highest interest for your savings. 

b) Find best fixed deposit account 

After you have put aside sufficient savings for your emergency funds, and would like to earn a higher interest rate on your savings, you can consider a fixed deposit account. 

Like a savings account, a fixed deposit account is also covered under the Singapore Deposit Insurance Scheme.

The key difference between a fixed deposit account and a savings account is that your savings will be locked up in a fixed deposit account. 

The time period that your savings will be locked up depends on the length of fixed deposit you choose. For example, you can choose a fixed deposit of 3 months to as long as 24 months.

While the interest rate that you are able to earn on the fixed deposit account is typically higher than a savings account, they key drawback is that you may lose out on your interest earned if you decide to withdraw your cash before the fixed deposit lock-up period is up. 

Find out which fixed deposit account offers the best interest rate currently.

Level 3 – Earn a higher yield

a) Find best foreign currency fixed deposit account

Apart from fixed deposit account, you can also consider a foreign currency fixed deposit account to park your savings and to earn a higher yield.

A foreign currency fixed deposit account might be useful especially if you have upcoming spending in the foreign currency. This may include plans to invest in overseas stock markets which will require foreign currency. 

However, you will face the foreign currency risk and potential losses if the foreign currency your fixed deposit is in weakens against the Singapore dollar.

Also, deposits in foreign currencies are not covered under the Singapore deposit insurance scheme. 

b) Find best cash management account

You can also consider parking your savings in a cash management account, which is effectively an investment into professionally-managed fund to generate a higher yield in a relatively low-risk way. 

These cash-management accounts may be offered by brokerages and robo-advisors, and seek to generate a higher yield compared to bank deposits. 

However, cash management accounts are not capital guaranteed, and they are also not covered under the Singapore deposit insurance scheme. 

Learn how to choose the best cash management account to earn a higher interest rate on your savings. 

c) Invest in Singapore Savings Bonds

Singapore Savings Bonds (SSBs) provide you with a simple and low-cost way to generate safe returns. 

SSBs are issued by the Singapore government. They are capital protected and you will get your investment amount back in full. This is an important feature as there are not many investment products that are principal guaranteed!

 You can choose to get your money back in any given month, with no penalty! Hence, you do not have to decide how long to invest into the Singapore Savings Bonds for from the start. 

You can invest for up to 10 years, allowing you to save for the long term if that is what you prefer.  You will receive interest payments on the Singapore Savings Bonds every six months. The interest paid will increase or “step-up” over time. In other words, the longer your hold on to the Singapore Savings Bonds, the higher average interest rate you will receive. 

You can invest with a minimum amount of $500, offering an attractive option to lock in long-term interest rates while offering flexibility of redeeming with no penalty.

Learn more about investing in Singapore Savings Bonds. 

d) Invest in Singapore Treasury Bills (T-bills)

Singapore Treasury Bills (T-bills) are fully backed by the Singapore government, and offer you a sound way to earn a regular interest payment.

Singapore T-bills have a short maturity period of 6 or 12 months. You should be prepared to hold the T-bills till maturity as T-bills offer less flexibility compared to the Singapore Savings Bonds.  

Learn more about investing in Singapore Treasury Bills

Take the next step

We can make use of a combination of the above to ensure a good mix of safety and liquidity. 

For example, we can earn a steady flow of interest income by building a bond ladder using T-bills and Singapore Savings Bonds. 

Use our cash optimiser tool to find out what is the best way for you to earn a highest interest for your savings. 

After you have maximized your savings, you can start to learn about how to start investing in a fuss-free way.