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Archive for the ‘Fixed Deposit Accounts’ Category

Independence is something that we all seek, right from the time when we are children. Of course, at that age, independence is generally associated with things like the freedom to choose our friends and the kinds of games that we play. However, as we become older, we begin to associate independence with other things. It is at this time that independence and money begin to become interlinked.

As we start earning our own livelihoods, we come to realize that we need to make our money grow. So we look forward to either investing our money in stocks and shares or depositing it in a bank. There is great joy to be gained in watching the money grow in multiple folds every year.

It is for the same reason that we listen to the advice of friends and family members when we have to open an account. Most often, we choose to open an account with a leading bank which offers various services. However, we should remember that these services do not come for free. As a result, we should look out for banks that charge the lowest rates for these services. For instance, a number of banks charge an additional fee if we ask for things like locker facilities or a greater number of check books. However, this may not be the case with all banks. In fact, several banks willingly offer the same services at no extra cost.

It is always better to open an account in no more than one or two banks. You might be tempted to go and get a few more bank accounts, but this is not recommended. What happens if you do this is that you lose track of your finances. This takes place especially if you are in the habit of operating all the accounts simultaneously. As a result, the savings in each diminishes at the same time. This is not a healthy way to operate a bank account. These days most bank accounts have the ATM facility; so we can draw cash in case of emergency.

Before opening an account with a bank, we must think hard about whether it is going to be useful or not. If we are working on a project and our client has an account with a particular bank, it makes sense to have an account there. This will enable the client to transfer funds to you immediately through that account. If there is no such purpose, you would only be locking up your funds in an account that you will not be operating.

Some banks also have the facility of automatically transferring your funds into a fixed deposit if you have not operated the account over a long period of time. This means that you earn more on the money in that account. In such a case, you would have made a good choice.

Bank accounts must be monitored on a regularly basis. Some banks charge a fee if the account is not operated every so often. Such minor details which we might oversee will have to be considered while opening an account.

Certificate of deposit or also know as CD is a time deposit, financial goods that are offered by credit unions, savings institutions and banks to the consumers. Certificate of deposits are virtually free of risk as they are similar to the savings account as they are insured. Howsoever they are bit different from the savings account as they are fixed for specific period of time (that can be from three months even five years i.e. user specific) and of fixed rate of interest. It is anticipated that CD is to be held by the customer until is matured and only then it can be with drawled from bank with the given rate of interest. They are also called a fixed deposit which is made in banks. This is a way of collecting money by the banks from its customers for the purpose of lending. This brings money in the market and it helps increase liquidity in the market which makes it an integral part of the market.

In this exchange of keeping the money in deposit section on an agreed term, banks pay us the interest but the question where do they get the money to pay interest, the answer is simple they collect the money from customers and lend this money as loans at higher interest rates to firms and people. Usually there are fixed rates in CD but banks also offer variable rate. Other than local banks CD are also offered by the independent sales person and also brokerage firms to the investors that are going for safer investments. These sales persons are called deposit brokers. Mainly these brokers offer higher interest rate on CD by assuring to get specific amount to the institution.

However early withdrawals i.e. before CD is matured as a rule are subjected to considerable penalty. These penalties make sure that the investor’s best interest is not to withdraw its money until it is of utmost importance. Usually banks mail notice to the investor that its CD matures shortly and further directions are required. Notice mainly offers the principal amount along with the rate of interest or rolling it over i.e. depositing the total amount into another CD. Generally there is a given time after the CD has been matured that the CD holder can collect the cash without paying any penalty. The more the duration of the deposit, the more interest it fetches.

Everybody becomes an investor when market is bull, but in times of crisis, a more detailed analysis of investment options is required. The criteria for selection of securities should be the following three:

1. Clarity about future profits (or visibility in benefits)
2. High shareholder returns
3. Reasonable valuations (value + quality)

Choose from different types of investments options listed here and eligible based on your risk tolerance and your investment goals.

What type of investment suits you best?

(1) Savings Account

Savings account investment is good for those investors who want to accumulate savings in lump sum or periodic payments. Savings account is a guaranteed fixed rate investment. Investors whose risk profile is very low shall opt for savings account options. Examples of such investment options are bank savings account, recurring deposit accounts, post office savings etc.

(2) Capital-guaranteed with a guaranteed fixed interest rate until maturity.

A certain segment of investors invests with the objective of saving their capital form the eroding effect of inflation. Such investors does not invest with target of big capital gains, instead if they just enough sufficient returns that matches inflation rate, they will be happy. Such investors shall look for this investment option. Examples of such investment options are bank fixed deposits, provident fund schemes, national savings certificates, government bonds, kisan vikas patra etc.

(3) Capital-guaranteed 100% with a return based on a market index

This type of investment options is also called Market-linked guaranteed investments because the capital is secured but returns are dependent on index fluctuations. Investors who have a low risk profile but would like to take advantage of investing in equity can opt for this investment option. Unit Linked Plans (ULIP) are an example of such type of investment. But be sure to invest for a long time horizons, as short term investing in ULIPS will attract huge loads and will result if more loss than gain.

(4) Mutual Funds

Investors who have a comparatively high risk profile and would like to take advantage of investing in equity can opt for this investment option.. Mutual Funds allow you to diversify your portfolio and benefit from the expertise of reputable managers.

(5) Shares and other securities

For those who want to invest in the stock market with or without the advice of an expert. This option is for those investors who has some basic knowledge of business and knows how to evaluate a business process. This know-how can be achieved after doing few months of research.

Let it whatever type of investment options suits your requirement, but remember that it is never too late to start investing. In worst case there are chances that you will not make big profits from your investment (may be only 8% to 9%) but it is still better than nothing. Suppose you decide to save $100 each month, then in next 5 years you have $6000 alone as your principal, which other wise you would have spent on unnecessary things. This it self is a big plus in addition to 8% return on your principal amount of $6000 (approx $450).

Taking above reasoning and justification into consideration, a reasonable option would be investment in Hedge Funds. This financial tool of investment (hedge funds) was born in United States in the 50s, has not yet had a strong entry in Asia. Contrary to what happened in countries like Sweden, which maintains a constant 9% of its investments in this alternative investment option. Hedge Funds are funds that combine short positions in securities and long positions to make a hedge of the portfolio against market volatility. The revenue generation of the most successful Hedge Funds can reach 150%. In contrast, investment in such instruments requires skills far superior to that of other common mutual funds and index funds. The idea is to seek absolute returns, whether markets is rising or falling. The advantage of investing in Hedge Funds can is as listed below:

* Diversification
* Risk Management
* Lower volatility
* Increased profitability
* Increasing the efficient frontier when added to a portfolio

The disadvantage of investing n hedge funds is as listed below:
* The risk in the choice
* High cost of professional management.

By now, unless you’re living on another planet, you’ve realized that we’re in a recession. A global recession that, luckily, is showing signs of turning around. But then again, recovery from recession can take years, if not decades.

The trick to surviving recession, and thriving, is to take action as soon as possible. Don’t wait for disaster to strike. Don’t pretend that it can’t affect you – it can. Now that we’ve got that out of the way, let’s look at key, easy ways that you can overcome the recession.

1. Trim the Fat

Whether at home, or in your business, there ARE ways you can cut back. Do you really need two family cars, or do you need a car that is quite so heavy on fuel? Are you shopping smart, buying cheaper house brands on anything from groceries to stationary? Have you cut back on expensive outings, and chosen to entertain at home instead? There’s always a way to reduce your costs. So look at your budget (you do have one, right?) and see where you can save!

2. Shop Around

Yes, most of us shop around for big purchases, which is great, but there are other ways you can make this work for you. Shop at cheaper supermarkets, for a small way to save. Then look at bigger expenses, like your mortgage, cell phone bill, insurance costs and so on. There’s always a better deal out there, especially now, when these companies are scrambling to keep their clients! Make some calls, find a better deal, and if you have to, switch. Although sometimes, presented with the choice, your regular provider may match your new deal.

3. Get a Second Income

Why wait until your job has vanished into thin air, before you start looking for alternative income streams? There are thousands of ways to make extra money – whether you turn a hobby, like fixing cars, or baking birthday cakes, into a business, or look for opportunities online, or even deliver pizzas on weekends for extra cash. Start multi tasking now, and not only will you have spare cash, but you’ll also be ready if disaster does strike, and you get laid off!

4. Pay Yourself

Often, we decide that everyone else is more important than our savings. We pump money into entertaining, getting our kids the latest shoes or video games, and all kinds of other things. Start taking a little of that, and putting it into a “personal slush fund” that’s there for emergencies. If you find it hard to save, arrange for a debit order to go off your salary, straight into a fixed deposit account. That way, you won’t miss it, and can’t access it too easily.

5. Keep the Goal in Mind

Yes, times are hard. Then again, big companies, like Proctor and Gamble, were founded in a recession. Why did they succeed? Because they stayed positive, knew their goals, and kept moving forward. So can you.

With all the uncertainty in the financial market right now, the old saying of “Cash is King” will definitely pop up frequently in your daily dealings.

If cash is really king right now, are you going to park your liquidity in a savings account then? You could do that but with the low interest rates, it might not be a good idea to put all your eggs in the same basket. You could try investing in money market. With an average of about 1% – 2%, it certainly beats putting it into a savings account. Although money market’s rate is definitely higher than savings account or a fixed deposit, the risk is higher too. A money market also does not ensure the preservation of the principle investment amount. Both tools are worth considering when you want to diversify. Are there any more tools to consider?

You can consider having a current linked mortgage if you are a high liquidity type of person right now. A current linked mortgage links both mortgage and a current account together and they both yield the same interest rates. It is worth taking a look at current linked mortgages that have interest rates that does not deviate much from the main stream mortgages. The interest from a current linked account can better a money market by as much as 100 to 150 basis points. Unlike a money market mutual fund, you do not have to make subsequent minimum investments, pay management fees or sales charges. A current account also guarantees your principle amount as well.

Others may argue that given a high liquidity position, I could just pay off the whole mortgage at one go. Why should I even consider such a large liquidity position? First of all, having cash allows you to source for investments with returns higher than your mortgage rate or inflation rate, whichever is higher. Secondly, with Singapore’s inflation rate at about 6% – 7%, and your mortgage {if effectively monitored} having an interest of about 2% – 3%, the cost of buying your house actually decreases over the years.

Current linked mortgages are definitely worth considering when the market is not as rosy and you cannot find a better place to park your money. They are instruments that are suitable for the sophisticated investor who monitors and adjusts his investment position periodically. You can also consider it if you have a dedicated advisor or private banker who attends to your financial needs constantly.

Talk to an advisor to find out about the different types of current linked available. Current linked is not a very widely advertised product as its market is not very well developed yet. So far only one local Singaporean bank offers this type of product. Ask your advisor to introduce to you some of the better current linked in the market as he or she may be more familiar with these types of products.

Singapore has many banks. They provide different types of services and products. Fixed deposit is one of them. The basic idea can be understood from the name itself. The customers should invest their money for particular time period. Bank authorities use this time period and manipulate the money. They re-invest the money in other ways and earn more money. The most important thing is time here.

Since the customers deposit their amount for a fixed period, it is called Fixed Deposits. The minimum investment required to start a deposit account is S$1000. Customers get high rate of interest. It is similar to the Certificate of Deposits. List of banks in Singapore is mentioned below here.

List of Banks:

DBS – Great World City Branch, Great World City, Singapore. UOB – Admiralty Branch, 70 Woodlands Avenue, Admiralty MRT Station, Singapore. Maybank – Marine Parade Central, Singapore. HSBC – Tanglin, 6 Claymore Hill, #01-01 Claymore Plaza, Singapore. Citibank -Cuscaden Road Branch, HPL House 50 Cuscaden Road #02-02, Singapore.

The deposit rate depends upon various factors. The key factors are amount and time duration. Rates of different banks are listed below here.

List of Fixed Deposit Rates:

In Citibank, the interest is 0.35% for amount up to S$50,000. In DBS and UOB, the interest is 0.45% for amount up to S$50,000. In HSBC, the rate is 0.48% for amount up to S$50,000. In Maybank, the rate of interest is 0.75% for amount up to S$50,000.