Wednesday, December 21, 2022

Mad About Fixed Deposits, SSBs And T-Bills…How About The Others?

I believe now it is super obvious that a lot of investors are mad on fixed deposits, Singapore Savings Bonds (SSBs) and treasury bills (T-bills). There will always be a moment where these things are mentioned, from informal conversations to family groups on chat apps. This is akin to a mania, which is usually associated as something bad. But unlike manias of the past (tulips) and present (meme stocks), this is a good one, for these financial instruments and their returns are reliable and almost guaranteed.

While people are clamoring for these products, other asset classes such as equities and REITs are being forgotten, and rightfully so, since they are currently experiencing a volatile period in a southerly direction. Though it may sound counter-intuitive at this moment, I believe it is the right time to look at them now. As per the principles of diversification (and rebalancing), we should not be overweight on a particular asset class.


While it is very tempting to capitalise on the high interest and coupon rates, we can consider capitalising on the equities and REITs fronts, too, since they are quite battered. With good selection criteria, for growth investors this means a potential capital gain; for dividend investors there might be a higher yield on cost at play; and for index investors the indices may go to yet another all-time high after recovery.


Cheers and Merry Christmas!

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