Pros and Cons of Fixed Deposits

Fixed deposits are another way to invest your money. Like other investment options, FDs have both advantages and disadvantages. To help you decide if a fixed deposit is right for you, here are some advantages and disadvantages of putting money into a fixed deposit.


Fixed Deposits give guaranteed returns

Unlike the stock market, they do not have price volatility. For example, if you invest $1000 for a year and the interest rate is 1.8% at maturity, you will get $1018 after a year. No more, no less.

Fixed Deposits give higher interest rates than ordinary saving accounts

Fixed deposits generally provide more interest than ordinary savings accounts. As of July 2018, fixed deposits provide up to 1.8% p.a. interest, whilst ordinary savings accounts only provide up to 0.80% p.a. interest.

Fixed deposits are virtually risk free (for smaller deposits)

Unlike other forms of investment, fixed deposits are virtually risk free. So long as the bank does not collapse, you will get your money back in addition to interest. Your deposits are also insured, up to $50,000 even if something happens to the bank, thanks to the Singapore Deposit Insurance Corporation (SDIC).

Fixed Deposit interests are not taxable in Singapore

This means you can keep all the income from FDs, so long as the bank is approved by IRAS.



There are other forms of investment that give higher returns

The main disadvantage of fixed deposits is that it pays relatively low interest rates. At up to 1.8% p.a., this is considerably lower than other forms of investment such as REITS, stock market trading and real estate (albeit with higher risk). For example, Singapore REITS provide 5-8% p.a. in dividends.

Fixed Deposits interest rates may not increase despite inflation

If inflation rate is higher than the FD’s interest rate, your purchasing power will decrease.

You cannot top up more money into a FD

You’ll have to open a new FD account which can only be done if you have enough money for the minimum.

Fixed Deposits will not yield any benefit if you withdraw early

There is also a maturity date. If the money is withdrawn before the agreed date, you either have to pay a penalty or have its interest forfeited. There may also be a need to give an advance notice.




Singapore REIT Fundamental Analysis Comparison Table – 1 July 2018

FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) decreases from  800.42 to 786.10 (-1.79%) as compared to last post on Singapore REIT Fundamental Comparison Table on June 1, 2018.  The REIT index has broken the 800 support and all 3 Moving Averages are turning down. This is a signal of bearish down trend.   The REIT Index has rebounded from a Resistance Turned Support and is currently testing the 20D SMA resistance. If this support zone is broken, the REIT index will continue to slide down to around 742 level.

Fundamental Analysis

  • Price/NAV decreases from 1.02 to 1.00 (Singapore Overall REIT sector is at fair value now).
  • Distribution Yield increases from 6.64% to 6.76% (take note that this is lagging number). About one third of Singapore REITs (15 out of 40) have Distribution Yield > 7%.
  • Gearing Ratio stays at 34.7%.  20 out of 40 have Gearing Ratio more than 35%. In general, Singapore REITs sector gearing ratio is healthy.
  • Most overvalue REIT is Parkway Life (Price/NAV = 1.58), followed by Keppel DC REIT (Price/NAV = 1.42), First REIT (Price/NAV = 1.31) and Mapletree Industrial Trust (Price/NAV = 1.31).
  • Most undervalue (base on NAV) is Fortune REIT (Price/NAV = 0.65), followed by  Starhill Global REIT (Price/NAV = 0.71), Far East Hospitality Trust (Price/NAV = 0.73), OUE Comm REIT (Price/NAV = 0.76) and EC World REIT (Price/NAV = 0.77).
  • Highest Distribution Yield (TTM) is Lippo Mall Indonesia Retail Trust (10.22%), followed by SoilBuild BizREIT (8.53%), Viva Industrial Trust (8.54%), Cromwell European REIT (8.49%), EC World REIT (8.27%), Sasseur REIT (8.22%) and Cache Logistic Trust (8.37%).
  • Highest Gearing Ratio are OUE Comm REIT (40.5%), iREIT Global (40.5%) and Soilbuild BizREIT (40.2%).

Disclaimer: The above table is best used for “screening and shortlisting only”. It is NOT for investing (Buy / Sell) decision. To learn how to use the table and make investing decision, Sign up next REIT Investing Seminar here to learn how to choose a fundamentally strong REIT for long term investing for passive income generation.

  • 1 month increases from 1.38291% to 1.40050%
  • 3 month increases from 1.50704% to 1.52038%
  • 6 month increases from 1.65446% to 1.66171%
  • 12 month increases from 1.84604% to 1.85065%


Fundamentally the whole Singapore REITs is at fair value now.  Overall yield for Singapore REIT is still attractive (average yield of 6.76%). Yield spread (reference to 10 year Singapore government bond) is 4.23%. DPU yield for a number of small and mid cap REITs are quite attractive at the moment.  However, technically, the REIT index is currently trading on downtrend and more down side is expected in the near term. It is time to get our watch list ready if the REIT sectors continue to correct to an attractive entry level.


REIT in Singapore is considered a Listed Alternative Investment. I will be inviting Sani Hamid to give a current market outlook and share his strategy on How to Safeguard Your Portfolio Using Regulated Alternative Investment.  This is an exclusive private event for my blog readers, my students and my guests. Registration is compulsory as seats are limited. Please register online here


See all other relevant  Singapore REITs blog posts here.

If you need an independent professional review on your current REIT portfolio and need any recommendation, you may engage me in the REIT portfolio Advisory. REITs Portfolio Advisory.

How to Safeguard Your Portfolio Using Regulated Alternative Investments



With markets at all time high, and potential violent market reactions that can be triggered by a tweet or trade war news, do you want to find out how you can protect your portfolio with such regulated alternative investments?

I have invited Mr Sani Hamid, a 21-year veteran working in the financial markets, to share with you:

  • What are the risk in the stock market right now
  • What are these regulated alternative investments which have low correlation or even uncorrelated to stock markets
  • How you can use such alternative investments to protect your portfolio


Please register HERE. Registration is compulsory due to limited seats. Strictly No Walk In Allowed.