Fixed deposit rates above Treasury Bill rates
Treasury bills have been trending below the 1% mark for the past few auctions. The interesting development is that fixed deposit rates for longer tenure of 9 to 24 months have rebounded from their downward decline in the past month.
So if you have say $50,000 to $100,000 in funds to put aside for a rainy day, should be put it in treasury bills or fixed deposits. My approach would be to use Fairprice Plus Savings at 1% as the alternative for liquidity, perhaps $10-20k in there because at 1%, the returns are higher than treasury bills and you have full liquidity to withdraw the entire amount any time. The remainder longer term funds can be parked longer for 6-12 months, with a number of the banks featured in this blog providing interest from 1.2 to 1.4%.
The stock market is providing for some good dividend yields among blue chips such as SPC, SPH, SMRT, etc. The yields can be as high as 6% plus if your purchase price was at the market lows. Of course, investing in equities is not the same as fixed deposits as the risk of capital losses is there should the market fall and share prices drop by 5 to 100% or more. However, for savvy investors, it provides for good returns in the long run given inflation at around 6%+ for 2008.
