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Park emergency fund in fixed deposits or SSBs?

Sunday, December 4, 2022

A reader asked if it is better to put our emergency funds in Singapore Dollar fixed deposits or in Singapore Savings Bonds?

Read the very thoughtful comment from the reader: HERE.

This is my reply:

For the longest time, I favored fixed deposits over Singapore Savings Bonds for my emergency fund.

This is largely because I am able to get my hands on the money immediately upon breaking a fixed deposit. 

On the other hand, as you have rightly pointed out, we have to wait for a month before we can get our money in the case of Singapore Savings Bonds if we were to make early redemptions. 

In an emergency, I probably need the money in a hurry. 

Waiting a month before I could get the money might be a luxury I could not afford. 

Even now, I am using the Singapore Savings Bond only as an alternative for money which I had planned to make voluntary contributions to my CPF account with. 

10 years is relatively long term and mimics what the CPF does for me and at least for people who are 45 years old or older.

Why do I say this?

From an interest income perspective, the Singapore Savings Bond makes more sense now than voluntary contribution to our CPF accounts.

In using fixed deposits to store my emergency fund, I make sure that each fixed deposit is relatively small with sums of between $10K to $25K each. 

This is because if I were to break a smaller fixed deposit, I would lose less interest income compared to breaking a larger fixed deposit. 

It is a reason why fixed deposit promotions like the recent one from UOB which requires a minimum sum of $50K in fresh funds to qualify are not viable for my emergency fund. 

This is only my belief, of course, which applies to my own circumstances and, maybe, eccentricities.

The following blog is probably most relevant to this discussion and you might want to read it if you have not done so before: 

Here are more references: 

Happy emergency fund building!

Recently published:
SSBs, T-bills, Fed up!


Yv said...


Just to share my own experience. Before the rate hikes, as FD and SSB rates were so unattractive, my emergency funds were parked mainly in UOB One Account & CIMB Fastsaver accounts as they offer relatively attractive interest rates in exchange for instant access to cash if the need arises.

The qualifying criteria for UOB One was the simplest compared to the rest such as OCBC360, SCBesaver, or DBSMultiplier. No need to buy insurance or investment products. I charge all my monthly expenses e.g. mrt rides, groceries, utility bills to hit the $500 card spend, and salary credit to the account, and that will allow me to hit the maximum EIR for One account.

While I have moved a portion of these emergency funds to short term FDs for now, savings tools like UOB One and CIMB Fastsaver will still come in handy when rates drop, as it will, some day.

Andy said...

Hi AK, can you please talk to yourself if you have some life insurances (ILP/endowment) which can be redeemed for say $100k cash, Would you redeem and put in SSB for the next 10yrs earning about 3% (for risk free) but lose out on the insurance coverage say $300k for CI for example. What other factors would you consider before redeeming the insurance? If you existing have 1mil term insurance for death/TPd/Ci ?

The Dreamzola Traveller said...

Personally, I prefer Fixed Deposit. It offer more liquidity, easier for me to redeploy the soldiers to fight and conquer new lands when opportunity comes. Mu hahahaha.

I like putting in small sums as well, and has some innovation with it. Putting them in different plans each with different month of maturity. So when time comes for payout, it pay out in different months, and it feel like every 2-3 months got some money coming in. Yuh, it is not much and the % is actually scaled according to the principal amount we are putting in but at least the soldiers are working harder paying us more returns rather than rotting themselves inside the saving banks.

I like the idea of making the money work for me rather i work for them. So anytime i see more lazy soldiers lying around in the saving bank not doing anything productive, I whip them and dump them into some place that generate some returns. Of course, i still maintain enough home guards in my account for everyday expenses. :).

AK71 said...

Hi Yv,

We are birds of a feather!

I also have UOB ONE account and CIMB account as they are the most undemanding and relatively rewarding.

They are especially so for someone who is gainfully unemployed like me.

No monthly salary to credit.


Thanks for sharing this as I am sure some readers will find it useful reference material. :)

AK71 said...

Hi Yv,

Oh, for sure we need to maintain an adequate float for daily use and maybe more.

However, you might laugh at me when I say I am so kiasu or kiasi that I keep quite a bit of cash at home all the while earning zero interest.

Emergency and convenience cash.

Silly AK!

I have the same strategy as you when it comes to fixed deposits.

People talk about bond laddering.

Why not fixed deposit laddering?

Win already lor!

I clap for us. LOL.

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