Dear readers, I believe it is the best time in recent years to be a Saver.
I use the phrase “to be saver” simply because if you have not had savings as a regular practice, this is a good time to start. However, if you have been prioritising savings or have a practice of saving some portion of your income, do continue to save.
It is great to be a saver in recent years, simply because the relatively risk-free Interest rates continue to be at decent highs:
3.76% per annum for the latest 6-month Singapore T-bill (BS24111X) which closed
3.30% per annum, on average for 10-years for the latest Singapore Savings Bonds (SBJul24)
And also banks’ fixed deposit interest rates, averaging around 2.70% to 2.80% per annum continue to be reasonable, albeit slightly lower than before.
While inflation rates and cost of living in Singapore do continue to stay high and many people may see increased spendings in their necessities, I believe this is exactly a time to save as much as one can, given the high interest rates. This is a contrarian approach, just akin to those who invest during stock market corrections to enjoy the highest return.
There are many who are still bullish on equities and had enjoyed far better returns on selected stocks in recent times and good on those who have enjoyed a profitable ride on their investments. But the high interest rates of savings bonds, T-bills and fixed deposits at relative low risks, have, in my opinion, eroded some of the propositions in investing, e.g. dividend investing and investing in Reits or Business Trusts for some dividend yields with some exposure to risks (already the dividend yields of stocks are declining in general).
But this does not mean that I am giving up on equities. What it means is that on a risk to return standpoint, T-bills, Fixed Deposits and Savings bonds are attractive now or in recent years
We should take advantages of the markets’ cycle whenever there are opportunities. Do leverage on the high risk-free interest rates while they last and in parallel, keep a look out for good investment opportunities when they come!