Dear readers, in the past, where interest rates are low, we have heard so very often, that one should put one’s monies in equities or stocks rather than saving it in the bank.
Back then, the common thinking was that Inflation would erode the value of our monies as the low interest rates paid out by banks could not simply catch up with the rate of inflation. And this is precisely, why in the past, some investors have turned to equities, especially those dividend stocks to earn a higher rate of return on their monies. And I also am aware that some individuals have also parked their monies in the CPF accounts to earn a much higher interest rate, risk-free.
All these have changed with the higher interest rates these days. Many banks and financial institutions are offering much higher interest rates which could rival the dividend yields of stocks. And I really think that these days, savers are winner and savings have become sexy once again.
Individuals who have been squirreling their monies are now handsomely rewarded as they get to choose from parking their monies in high interest rate saving accounts, rather than locking them in equities whose outlook have become no less clear than before and where dividends may have reduced or become scrapped off altogether.
While it still remains unclear whether these high interest rates will continue to stay for long, and whether investors who keep invested in the CPF accounts and dividend stocks may still emerge as winners in this game of saving, the bottomline is to always keep some liquidity on hand. Cash is valuable in safeguarding economic uncertainty or when used as a warchest to further grow the savings be it through the high fixed deposits we are seeing now or when taking advantage of a stock market correction.
Or put it simply, in any cycle of business, cash and liquidity will always remain to be very valuable.
Hence, I encourage All of us to keep saving, even as simple as just $1 a day to build up a liquidity capital that we can turn to in times of need and grow in all cycles of the economy.