Earn 3.8% p.a. with StashAway Simple Guaranteed. A good alternative to T-bills?

This post was created in partnership with StashAway. All views and opinions expressed in this article are Beansprout's objective and professional opinions.

What happened?

The yield on the Singapore T-bill has been falling in the past few months.

From a recent high of 4.07% in September, the yield on the 6-month Singapore T-bill has fallen to 3.74% in January. 

This led some investors to ask if there are alternatives that we can consider to earn a guaranteed return on our savings.

We recently came across StashAway Simple^TM Guaranteed, which offers investors a guaranteed rate of 3.8% p.a. over a 3-month lock-in period.

As such, we decided to find out more about Simple Guaranteed, and understand if it might be a good alternative to T-bills. 

What’s StashAway Simple^TM Guaranteed?

Simple Guaranteed is a cash management portfolio that places your funds into a fixed deposit. 

As its name suggests, it offers a simple and hassle-free way to earn a guaranteed rate on your cash. 

The key features of StashAway Simple^TM Guaranteed are:

• Earn a guaranteed 3.8% p.a. for a tenor of 3 months
• Tenors of 1, 3, 6, 12 months available 
• No minimum or maximum deposit amounts
• Underlying funds are put into fixed deposits at MAS-regulated banks
• Invest your cash or SRS.

#1 – Guaranteed rate of 3.8% p.a. for 3 months 

StashAway Simple^TM Guaranteed allows you to earn a rate of 3.8% p.a. for a tenor of 3 months. 

If you’d prefer to lock in the rate for a longer period of time, you can earn a guaranteed rate of 3.6% p.a. for a tenor of 6 months, and a guaranteed rate of 3.3% p.a. for 12 months.      

If you have near-term cash needs and are just looking to make your cash work harder for a short period of time, Simple Guaranteed allows you to earn a guaranteed rate of 3.6% p.a. for 1 month. 

Once you lock in your guaranteed rate, it will remain fixed throughout the lock-in period. 

However, if you would like to deploy fresh funds into Simple Guaranteed, it would be good to check the latest rates on the StashAway site, as the rates can change daily between Monday and Friday.  

StashAway is able to guarantee the rate by investing your funds in a fixed deposit with a MAS-licensed bank. 

Here’s the good news - the rate you see is the rate you get as there are no fees to Simple Guaranteed.

StashAway makes a small spread through the difference between the yield they get from the bank and the guaranteed rate offered to you. This means that there are no hidden fees as well. 

#2 – No minimum and maximum investment amount 

There is no minimum and maximum investment amount for Simple Guaranteed. 

You can earn the guaranteed rate starting from as little as $1.

However, you should make sure that you will not require the cash during the lock-in period, as you will not be able to withdraw your cash until the tenor ends.     

#3 – Simple way to earn a guaranteed rate

You can start earning the guaranteed rate in a few simple steps. 

There are no hoops to jump through, no lengthy processes or paperwork, or complex requirements. 

For example, you will not need to deposit fresh funds, as existing funds on StashAway can earn the guaranteed rate too. 

There is also no need to meet any minimum salary deposit or credit card spend to earn the guaranteed rate.

What are the risks of StashAway Simple^TM Guaranteed?

#1 –Simple Guaranteed is not SDIC insured

It is important to note that SDIC coverage will not be applicable to your funds in Simple Guaranteed on an individual level.      

This is because SDIC insurance applies only to StashAway as a firm to the value of S$75,000 

However, StashAway only partners with MAS-regulated banks that are subject to stringent regulations. 

If you are not familiar with StashAway (Asia Wealth Platform Pte Ltd), it is one of the top 5 fastest-growing companies in Singapore in 2023 according to The Straits Times. 

The company is regulated by the Monetary Authority of Singapore (MAS), and has more than US$1 billion in assets under management since 2021. 

You can learn more about how StashAway keeps your money secure here.    

How does StashAway Simple^TM Guaranteed compare with fixed deposits?

StashAway Simple^TM Guaranteed offers a comparable rate relative to the best fixed deposit interest rates across most tenors as of 4 January 2024. 

• 3-month guaranteed rate of 3.8% p.a. is higher than the best 3-month fixed deposit rate 
• 6-month guaranteed rate of 3.6% p.a. is comparable to the best 6-month fixed deposit rate 
• 12-month guaranteed rate of 3.3% p.a. is comparable to the best 12-month fixed deposit rate 

Also, fixed deposit accounts typically require a minimum deposit of S$500 and above. However, there is no minimum investment required for Simple Guaranteed.

Compared to putting your savings directly into fixed deposits with a bank, Simple Guaranteed is not covered by the SDIC. 

How does StashAway Simple^TM Guaranteed compare with T-bills?

Simple Guaranteed offers a guaranteed rate of 3.8% p.a. for three months and 3.6% p.a. for six months, close to the cut-off yield of 3.74% for the latest six-month T-bill auction on 4th January. 

The T-bill is backed by the Singapore government, while your funds in Simple Guaranteed are put into fixed deposits through MAS-regulated banks. 

The minimum investment in the Singapore T-bill is S$1,000, while there is no minimum investment amount for Simple Guaranteed.

Also, you will know the rate you will get on Simple Guaranteed upfront, and the rate you see is the rate you get. 

However, we will not be able to find out the expected cut-off yield for the T-bill before the auction.

How does StashAway Simple^TM Guaranteed compare with savings accounts?

StashAway Simple^TM Guaranteed’s rate of 3.8% p.a. for a 3-month tenor is higher than the interest rate offered by most no-frills savings accounts.

However, Simple Guaranteed is not insured under the SDIC. 

In addition, your funds in Simple Guaranteed will be locked in for a tenor of 1 month to 12 months and you will not be able to withdraw them at short notice for emergency use.

While some savings accounts offer higher effective interest rates, they typically require you to meet certain requirements such as salary deposit or credit card spending. 

On the other hand, there are no hoops you will have to jump through to earn the guaranteed rate through Simple Guaranteed. 

How does StashAway Simple^TM Guaranteed compare with other cash management accounts?

Cash management accounts such as StashAway Simple^TM and StashAway Simple^TM Plus also aim to help your cash work harder. 

However, your investment in Simple Guaranteed is parked in a fixed deposit with a MAS-regulated bank, while both Simple and Simple Plus invest in money market funds and bond funds.

This means that the returns on the Simple and Simple Plus can fluctuate based on interest rate movements and economic conditions, while the principal and interest amounts for Simple Guaranteed are guaranteed (subject to the underlying bank risk). 

What would Beansprout do? 

While bond yields have been falling in recent weeks, we can still find other options that allow us to make our cash work harder. 

StashAway Simple^TM Guaranteed is an option to consider if you would like to beat the best fixed deposit rate and earn a guaranteed rate of 3.8% p.a. on your savings over a 3-month period.

Simple Guaranteed is not covered by SDIC, but StashAway lowers the risks by investing in fixed deposits with banks regulated by the MAS. 

If you have yet to decide what to do with your SRS funds after making a contribution, you have the option of investing the funds into StashAway Simple^TM Guaranteed to earn the guaranteed rate too. 

Learn more about StashAway Simple Guaranteed here. 

Disclaimer

This advertisement has not been reviewed by the Monetary Authority of Singapore. 

Any information provided in this article is meant purely for informational and investor education purposes, and should not be relied upon as financial or investment advice, or advice on corporate finance.

This article 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 article also 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 rate is correct at the time of publishing. Check the latest rates at https://www.stashaway.sg/simple-guaranteed

The information provided in this article are on an “as is” and “as available” basis without warranty of any kind, whether express or implied. Beansprout does not recommend any particular course of action in relation to any investment product or class of investment products. No information is presented with the intention to induce any person to buy, sell, or hold a particular investment product or class of investment products.

You may wish to seek advice from a financial adviser before making a commitment to purchase the product; and in the event that you choose not to seek advice from a financial adviser, you should consider whether the product in question is suitable for you.

The information provided herein may contain projections or other forward looking statements regarding future events or future performance of countries, assets, markets or companies. Actual events or results may differ materially. Past performance figures are not necessarily indicative of future or likely performance.

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