Look Beyond High Interest Savings Account, T bills/Insurance Policies; REITs and a few SGX companies Provide Better Yields with Low Risk

In recent meet ups, I have heard the lamenting that the reduction in interest rates of local bank's high interest savings and T bills have meant their money now compounds slower.

Safe but Very Slow

No doubt bank savings account are protected by the SDIC but due to how secured it is, the interest rates earned is fairly low.

In my view, Singaporeans should look beyond complete protection and stability. Taking some risk is needed to earn higher returns, it is a rule (pherhaps even law) in all investments. The rate of returns follows the rate of risk taken.

But That Dosen't Mean Taking Extreme Risk

That brings me to offering the solution of investing in stable companies that offer higher yields such as the local REITs (especialy Keppel and Capitaland [CICT]) and that of the 3 local banks. They are at 6.5% and 5% yield respectively.

No doubt there is risk involved, but my view is due to their systematic importance to Singapore's economy, the government will put a backstop in a severe economic downturn. Singapore neither wants to see a collapse of one bank nor a total selldown in City's area commercial office/retail space at 35% discount (like what is happening in China Tier 1 Cities). 

Should any of these situation happen, it will cause a downward spiral of Singapore's economy and a permanent loss of wealth for the rich of this country. Something the current government will not want to happen.

Hence while it is not a 100% chance they will be saved, it is likely a 95% chance; hence for some risk with a high degree of stability, investors can earn a much higher yield than what high interest savings, T bills or even insurance policies can offer.

Putting in Words the Solution

Therefore look beyond the realm of high (ironically now low) interest savings account and Singapore T bills, there are better options: the 3 local banks, Keppel REIT, local Capland and Fraser REITs; higher returns while investors take a low degree of risk.

Of course, people will point out that I do not invest in them (except for Keppel REIT) but that's because I wish to take higher risk on higher yield SGX stocks