Where to park your cash for higher yield? T-bills vs Fixed Deposit vs SSB (Updated 22 Nov 2024)

What happened?

It appears to be getting harder to find a place to park our cash these days.

The yield on the Singapore T-bill has been declining, and banks have been cutting their fixed deposit rates too. 

Just yesterday, I saw a question in the Beansprout community about where to park our cash to earn a higher yield. What are the options that allow us to earn a yield of above 3% p.a.?

In this article, I will share the following:

• Latest interest rates on fixed deposits, T-bills, SSBs and money market funds
• Advantages and disadvantages of putting your cash into these options
• What I would consider in deciding between fixed deposits, T-bills, SSBs and money market funds
• My strategy for parking my cash to earn a higher yield

Best 12-month fixed deposit rate in Singapore of 3.20% p.a.

Firstly, let's take a look at the best fixed deposit rates in Singapore in November. 

• The best 3-month fixed deposit rate is 3.00% p.a. offered by Bank of China.
• The best 6-month fixed deposit rate we found was 2.90% p.a. offered by Maybank.
• The best 9-month and 12-month fixed deposit rate we found was 3.10% p.a. and 3.20% p.a. offered by DBS respectively.
• For senior citizens, DBS offers the best 12-month fixed deposit rate of 3.30% p.a.

To get the latest list of best fixed deposit rates this month, check out our guide to the best fixed deposit rates in Singapore.

Best no-frills savings account in Singapore offers interest rate of up to 3.28% p.a.

If you are looking for a no-frills savings account to park your savings, GXS is also offering an interest rate of up to 3.28% p.a. for a 3-month tenure through its Boost Pocket. Learn more about the GXS Boost Pocket here. 

The HSBC Everyday Global Account (EGA) is offering a promotional interest rate of up to 3.55% p.a. In addition, you can earn an additional 1% bonus interest rate on the incremental SGD average daily balances under the HSBC Everyday+ Rewards Programme.

Learn more about the best savings account in Singapore here. 

Latest 6-month Singapore T-bill offers yield of 3.08%

The yield on the Singapore T-bill has stabalised after months of decline.

The cut-off yield on the 6-month T-bill in Singapore was at 3.08% in the recent auction on 21 November 2024, having risen from 3.04% in the auction on 7 November.

With this rebound in the yield, it is above the best 6-month fixed deposit rate of 2.90% p.a. given that some banks have cut interest rates further.

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Latest Singapore Savings Bonds (SSB) offer a 10-year average return of 2.81%

The December issuance of the SSB (SBDEC24 GX24120F) offers a 1-year interest rate of 2.66%, and a 10-year average return of 2.81%. 

This is much higher than the 10-year average return of the previous SSB, which was 2.56%. 

The 1-year interest rate of 2.66% is below the best 12-month fixed deposit rate of 3.20% p.a.

However, I would consider the SSB mainly for the opportunity to lock in the yields for a period of up to 10 years.

You can get the latest interest rate projections for the next SSB here. 

What are the other options to earn a higher yield? 

Fixed deposits are seen as relatively safe options to park our cash as our savings will be insured to up to S$100,000 under the Singapore Deposit Insurance. 

At the same time T-bills and Singapore Savings Bonds are relatively low risk investment options as they are issued by the Singapore government. 

I have also seen a lot of discussion in the Beansprout community about other ways to earn a higher yield.

From the way I see it, I would group them into products that claim to offer guaranteed returns and those that do not. 

However, I would highlight that these are not capital guaranteed, even if they were to offer guaranteed returns. 

#1 - Cash Management Accounts that offer more liquidity 

Cash management accounts aim to provide higher potential returns compared to savings accounts, and greater flexibility compared to fixed deposits.

Some examples of cash management accounts include Moomoo Cash Plus, Tiger Vault, Webull Moneybull, Endowus Cash Smart, Mari Invest and Phillip Smart Park 

By putting your money in a cash management account, you will be investing in money market funds or bond funds. 

These professionally managed funds will put your cash in instruments such as bank deposits or short-term debt to earn higher interest rates.

The indicative 7-day annualised yield of the Fullerton SGD Cash Fund was about 3.07% as of 15 November 2024. 

However, it is worth pointing out that these funds are not capital guaranteed, and funds in cash management accounts are not insured under Singapore Deposit Insurance Corporation Limited (SDIC).

There are several ongoing promotions for investments in Singapore dollar money market funds. 

• Tiger Brokers is offering a interest bonus coupon that allows you to earn 6.8% p.a. with Tiger Vault. Learn more about the Tiger Vault promotion here.
• Moomoo Singapore is offering a guaranteed return of 6.8% p.a. when you deposit your funds into Moomoo Cash Plus. Learn more about the Moomoo Cash Plus promotion here.

#2 – Cash Management Accounts with guaranteed returns

Firstly, a few of the robo-advisors have introduced cash management solutions that offer guaranteed returns. 

They generate the returns by investing your funds into fixed deposits products provided by banks in Singapore.

For example, Syfe Cash+ Guaranteed is the cash management solution offered by Syfe which offers investors guaranteed returns for their idle cash. 

Syfe Cash+ Guaranteed offers a guaranteed return of 3.10% per annum for a term of 3 months as of 7 November 2024. 

StashAway Simple Guaranteed also offers a guaranteed return on your investments, with a 3-month guaranteed rate at 3.10% as of 7 November 2024. 

 #3 – US dollar denominated options to park your cash 

If you have idle cash denominated in US dollars, you can also consider the following options to earn a higher yield compared to the T-bill.

However, if you are converting from SGD to USD,  you should be aware of the foreign currency exchange risks. This is because the US dollar could weaken against the Singapore dollar. 

USD Fixed Deposits

• The best 12-month US Dollar fixed deposit rate is 4.00% p.a. offered by Bank of China.
• The best 6-month US Dollar fixed deposit rate is 4.35% p.a. offered by Bank of China.
• The best 3-month US Dollar fixed deposit rate is 4.75% p.a. offered by SBI.

You can check out the best USD fixed deposit interest rates in Singapore here. 

US Treasuries 

US Treasuries are debt securities issued by the US Department of the Treasury, just like the Singapore T-bills are backed by the Singapore government. 

The US 1-year Treasury yield is at 4.27% as at 7 November 2024, having rebounded recently after the US of interest rate cut. 

You can purchase US Treasuries using on either Moomoo Singapore or Tiger Brokers. 

USD Money Market Funds

Some of the cash management accounts also allow us to invest in money market funds denominated in US dollars. 

There are several ongoing promotions for investments in USD money market funds. 

• Tiger Brokers is offering a interest bonus coupon that allows you to earn 6.8% p.a. with Tiger Vault. Learn more about the Tiger Vault promotion here.
• Moomoo Singapore is offering a guaranteed return of 6.8% p.a. when you deposit your funds into Moomoo Cash Plus. Learn more about the Moomoo Cash Plus promotion here.

What to consider when choosing between T-bills vs fixed deposits vs SSB vs money market funds? 

There are 4 questions I would think about when considering these options.

• Am I comfortable with a product that is not be insured by SDIC or backed by the Singapore government?

If I am comfortable in doing so, then I would also consider cash management accounts to earn a higher yield on my cash.

• Will I need the money in short notice? 

If liquidity is of importance as I may need the cash for other uses in short notice, then I may prefer cash management accounts that offer liquidity typically within days. 

• Do I want to lock in the yields for a longer time period?

If I am looking to lock in the current high interest rates for a period of up to 10 years and not have to worry about reinvestment risks, then the Singapore Savings Bonds allow me to do so while having the flexibility to redeem anytime.

• Do I have any use for the cash in US dollars?

If I am looking to invest in US stocks or ETFs or have other uses of US dollars, then I may consider the US dollar denominated fixed deposits, money market funds or Treasuries. 

Otherwise, I may face foreign currency risks when converting the money back into Singapore dollar in future. 

What would Beansprout do? 

With the drop in T-bill yields, I’m reconsidering putting all my funds into T-bills, as they may no longer offer the most attractive returns. 

Instead, I’m exploring alternatives that provide higher yields, even if it means taking on a bit more risk.

For instance, I’d consider money market funds to earn a higher yield than T-bills while still meeting my liquidity needs.

I’ve also mentioned that bond funds can provide exposure to a diversified basket of bonds, which may appreciate if interest rates decline.

Of course, this assumes I’ve already set aside emergency cash in a high-interest savings account.

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