I like the way CIMB says “Your money should work, not you!“. Following my previous post on “Fifty Six Percent Invested Forty Four Percent Cash“, I do have some spare cash to place into a fixed deposit or Singapore Savings Bonds. Both are brainless, effortless investments where you sit and wait till maturity to earn the interests.
If you remember, CIMB offers a fixed deposit promotion during Chinese New Year whereby you can get up to 1.90% interest per annum if you do a placement for 12 months online. It seems that this promotion is here to stay as they are offering the same promotion in the month of March.
You can choose the duration of 3 months, 6 months or 12 months and if you apply online, they offer higher interest rates as shown in the table below.
|Interest Rates (% p.a.)|
|3 Months||6 Months||12 Months|
|Online Exclusive Rates||1.55||1.70||1.90|
A minimum of S$10,000 per placement is required.
Using S$10,000 as an illustration,
If you place a fixed deposit for 3 months, the total accrued amount (principal + interest) that you will receive is
A = 10000(1 + (0.0155 × 0.25)) = 10038.75
A = $10,038.75
If you place a fixed deposit for 6 months, the total accrued amount (principal + interest) that you will receive is
A = 10000(1 + (0.0170 × 0.5)) = 10085
A = $10,085.00
If you place a fixed deposit for 12 months, the total accrued amount (principal + interest) that you will receive is
A = 10000(1 + (0.0190 × 1)) = 10190
A = $10,190.00
CIMB Fixed Deposit Promotion Versus Singapore Savings Bonds
How does this promotion fair against the latest Singapore Savings Bonds?
If we have placed S$10,000 in the April 2019 Singapore Savings Bonds, we will receive S$196 in interest payout after a year. This will be S$6 more than CIMB 12 months fixed deposit promotion. If we deduct away the S$2 application fee for Singapore Savings Bonds application, then it will be S$4 more.
Both are comparable, risk free investments. If you ask me, I might prefer the Singapore Savings Bonds as there is no lock in period. You can sell off the bonds and there is no penalty should you need the money urgently within the 12 months.
My favorite website, StocksCafe has introduced a new feature to allow adding of Singapore Savings Bonds into your portfolio. If you didn’t know, I signed up as a Friend of StocksCafe as my most favorite feature of StocksCafe is the automated tracking of dividends payout.