Seeking Higher Growth in Fixed Deposits

Recently I checked out the highest fixed deposit rates across banks in Singapore, the highest so far that i have seen is Maybank’s iSavvy account which offers 1.68% pa.  However all this really does not fare well against the current rising inflation rates.

Fixed Deposits are generally “safe” refuges for today’s money. Traditionally the first option for people who have money in the tunes of 10k, 30k, 50k and above. It is relatively accessible & highly liquid.

With inflation currently at a record high of more than 5%, people are beginning to source out better alternatives to putting their money. Banks remain as the popular choice for the cash rich due to its accessibility and liquidity. Fixed Deposits stays on the top of people’s minds as the safest place to put money in. However the safest place now no longer offers the same refuge 20 years ago.

Money left in Fixed Deposits are depreciating whether you like it or not. Inflation is something out of our control, thus we can no longer say that Fixed Deposits are the best watch dogs to safeguard your money. So long for our money watch dog!

$50,000 now will only be worth 60% of its value 20 years down the road if inflation averages around
2~3%. With 1.68% interest, your money still gets depreciated by 0.32% to 1.32%. Is there any better alternative in this day and age???

Equities are the answer to this problem now. Why? Relatively low risk, better diversification as well as better growth, a decent investment should give between 10% to 17% growth yearly. A well planned equitiy portfolio guided by principles should give a respectable yield that hedges against inflation and still grow your money.

Why settle for a watch dog that doesn’t effectively guard your money when you can get a tree that feeds you?

Lets be creative with our money, using a mixture of instruments on the market we can create the tree that bears good fruit.

 

Inject the capital from your fixed deposit into a capital appreciating tool that gives you 4% pa.  By using the yearly dividend payout, invest into a regular investment linked policy for 20 years. At the end of 20 years, you will have more than double the money, along the way you can still have the flexibility of consuming the yearly dividends or reinvest into the investment linked policy. Surely this gives you a better alternative compare to fixed deposits. What is the risk? The risk is minimal, firstly, the capital appreciating tool retains its capital at the end of 20 years, and by using dollar cost averaging over 20 years, your investment is not affected by market fluctuations.

For more info on a capital appreciating vehicle go to http://ethan.insights.to/retirement and visit my other blog http://ethan.sincerely.to/you