Mr Thum also highlighted products offered by digital banks and financial institutions such as Stashaway, GXS, Singlife and Syfe, where interest rates are close to 3 per cent.

“The biggest positive is that these are all very low-risk investments,” he said, adding that the minimum amount is as low as S$100 for some products.

Mr Ray Zheng, client advisor at Providend, said the returns on products offered by financial institutions can be attractive, but investors should know where their money is actually going – whether it is term deposits or various funds.

SingCapital CEO Alfred Chia added that some companies may offer higher returns as a marketing tactic. Investors should be aware of real long-term returns.

ALTERNATIVES WITH HIGHER LIQUIDITY

For investors looking for products without a lock-up period, fixed-income funds and money market funds are two possible alternatives, according to Providend’s Mr. Zheng.

The first is a basket of investment grade bonds and the second is a basket of short-term fixed deposits managed by a fund manager.

Both are very liquid, so investors can usually withdraw their funds when needed.

Investment grade bonds have a minimum rating of BBB, which indicates that the bond issuer is in a good financial position to pay interest to investors.

“Bonds and fixed-income securities are generally considered low-risk instruments,” Mr. Zheng said, noting that they are less volatile than other asset classes like stocks.

“When markets are down, bonds or fixed income fall less than stocks,” he said.

Fixed income funds and money market funds generally have lower minimum investment amounts than direct bonds or term deposits.

However, Mr. Zheng noted that these funds can be less transparent and more difficult to understand than buying bonds or putting money in term deposits.

Mr Alfred Chia, CEO of SingCapital, said there is potential for capital gains when investors purchase a fixed income fund.

When interest rates fall, bond prices generally rise. An investor could gain by selling the bond at a higher price.

He also said investors should consider stocks to build a balanced portfolio for the long term.

“Let’s say low-risk investors can consider an investment portfolio that is 80 percent bonds and 20 percent stocks,” he said.

When interest rates fall, the cost of borrowing for businesses decreases. “Companies that can manage well will be able to increase their profits, so ultimately the stock markets will do well. »