Introduction: The Challenge of Growing Wealth in a Low-Rate World
Singapore’s latest 6-month Treasury Bill (T-bill) closed with a cut-off yield of 1.38% per annum, slipping once again from the 1.44% per annum offered in the previous tranche. For those who remember when cut-off yields of 2% to 3% per annum were common, the decline feels disappointing but unsurprising.
We are living in an era of lower rates, even as the cost of living continues to rise.
👉 How can people grow their money when traditional safe instruments like T-bills, fixed deposits, and savings accounts are no longer sufficient?
🔎 Featured Snippet Style Summary
- Best low-risk options (2025): T-bills (~1.3%), money market funds (~1.4%), fixed deposits (~1.1%).
- Higher-income options: REITs (5–7%), dividend stocks (4–6%), private equity bonds (3–5%).
- Diversifiers: Endowment plans (~2%), SRS, robo-advisors, gold.
💡 A balanced mix of safety, income, and growth is key to beating inflation in Singapore today.
Investment Choices in a Low-Rate Environment
1. Equities and Dividend Stocks
Investing in stocks, whether locally or internationally, remains one of the most direct ways to build wealth.
Why consider stocks?
- They offer growth potential over the long run.
- Many companies pay dividends, which can provide income of 4–6% per year.
Examples of dividend-paying stocks:
- Banks like DBS, OCBC, and UOB.
- Companies such as Singtel and Keppel Corp.
Risks:
- Stock prices can fluctuate sharply.
- Dividends may be cut during economic downturns.
💡 A sensible approach is to invest gradually over time, spreading out entry points.
2. Real Estate Investment Trusts (REITs)
REITs are among the most popular income investments. They own properties like malls, offices, logistics facilities, and data centres, and pay out most of their rental income to investors.
Why they appeal:
- Many REITs pay 5–7% annually.
- They distribute dividends regularly, often quarterly.
- Some are undervalued, trading below the value of their assets.
Risks:
- REITs borrow heavily, so higher borrowing costs can hurt them.
- Sector-specific risks — malls face e-commerce competition, offices face hybrid work trends.
Personal approach:
I have started buying into undervalued REITs with healthy balance sheets and yields above 5%.
3. Private Equity Bonds
Private equity bonds, such as the Astrea series, allow retail investors to access returns from private equity funds.
Features:
- Issued in tranches with different levels of yield and risk.
- Backed by pools of private equity investments.
Advantages:
- Offer higher yields than government bonds.
- Provide exposure to an alternative asset class.
Drawbacks:
- More complex than plain bonds.
- Not risk-free — stressed conditions could affect payouts.
Best used as a small part of a diversified portfolio.
4. Money Market Funds
Money market funds invest in short-term, high-quality debt. An example is the PhillipCapital SMART Park Fund, which has been yielding around 1.4% annually.
Pros:
- Safer than equities.
- Provide daily liquidity, allowing quick access to cash.
Cons:
- Returns are modest, barely above inflation.
- Though generally safe, they are not completely risk-free.
These funds are best suited for short-term cash management.
5. Fixed Deposits
Once a favourite of savers, fixed deposits have lost much of their shine. For example, OCBC currently offers just 1.1% per year for a $20,000 placement.
Pros:
- Safe and guaranteed.
- Useful for funds that cannot be risked.
Cons:
- Low returns.
- Large sums locked here lose purchasing power after inflation.
Other Alternatives for Savers
Insurance Endowment Plans
Provide guaranteed returns of about 2% annually with insurance protection built in.
Pros: Stability and protection.
Cons: Long lock-in periods, less liquidity.
Retirement Accounts (SRS)
The Supplementary Retirement Scheme (SRS) provides tax relief while allowing contributions to be invested in approved instruments.
Pros: Tax savings + long-term compounding.
Cons: Withdrawals restricted until retirement.
Robo-Advisors
Platforms such as Endowus, Syfe, and StashAway offer low-cost, globally diversified portfolios.
Pros: Hands-off, diversified, convenient.
Cons: Market swings still apply.
Gold and Precious Metals
Gold does not provide income, but it protects against inflation and financial instability. Investors can buy physical gold, ETFs, or gold savings accounts.
A small allocation of 5–10% is usually sufficient for diversification.
Comparison Table: Investment Options in Singapore (2025)
| Investment Option | Typical Returns (2025) | Risk Level | Liquidity | Notes |
|---|---|---|---|---|
| T-bills (6-month) | ~1.3–1.4% p.a. | Very Low | High (tradable) | Government-backed, but yields are falling. |
| Fixed Deposits | ~1.0–1.2% p.a. | Very Low | Medium (locked) | Safe but barely beats inflation. |
| Money Market Funds | ~1.3–1.5% p.a. | Low | High (daily) | Good for parking cash; not risk-free. |
| Private Equity Bonds | 3–5% p.a. | Medium | Medium (locked) | Example: Astrea series; higher yields, higher risk. |
| Dividend Stocks | 4–6% p.a. | Medium–High | High | Banks, telcos, blue chips; subject to market swings. |
| Singapore REITs | 5–7% p.a. | Medium | High | Attractive yields, but sensitive to interest rates. |
| Endowment Plans | ~2% guaranteed | Low | Low (long lock-in) | Insurance protection included. |
| Gold/Precious Metals | No yield; capital gains only | Medium | High (ETFs) / Low (physical) | Inflation hedge, safe-haven asset. |
| Robo-Advisors | Varies (3–6% long term) | Medium | High | Globally diversified; convenient but market-linked. |
💡 Takeaway: The safest options (T-bills, fixed deposits) now yield very little. To beat inflation, a mix of REITs, dividend stocks, and alternatives may be necessary.
FAQs – Growing Money in a Low-Rate Environment
Q1: What is the safest way to grow money in Singapore today?
T-bills and fixed deposits are safest, but they barely beat inflation. Adding REITs and dividend stocks balances safety with higher returns.
Q2: Are REITs still attractive in 2025?
Yes. Many REITs still offer yields above 5%, especially those trading below their asset value.
Q3: Should I choose fixed deposits or money market funds?
Fixed deposits offer certainty, while money market funds provide flexibility and slightly higher yields. The right choice depends on your liquidity needs.
Q4: How can I protect my savings from inflation?
Investing in dividend stocks, REITs, and retirement-linked products helps. Keeping everything in cash guarantees a loss of purchasing power.
Q5: What’s a simple portfolio strategy for beginners?
Allocate some money to safe instruments (T-bills, deposits), some to income assets (REITs, bonds), and some to growth (stocks, ETFs). Keep a small portion in gold for diversification.
Conclusion: Growing Wealth Amidst Low Interest Rates
The days of comfortably relying on fixed deposits or T-bills for meaningful yields are behind us. To grow wealth today, savers must broaden their strategies.
- Stocks and REITs can deliver attractive income and growth but come with volatility.
- Private equity bonds and money market funds provide middle-ground choices.
- Fixed deposits and T-bills are still relevant for absolute safety, but their returns are limited.
Personally, I find REITs especially compelling right now, with sustainable yields above 5% and room for capital appreciation.
Ultimately, success in a low-rate world depends not on chasing the highest return, but on being disciplined, diversified, and patient. By constructing a balanced portfolio, you can protect your savings and grow your wealth even in challenging times.