Quote:
Originally Posted by Hurricane88
Whoever is placing large amount of money in FD will not be rich...cash is king but what is the point that cash $100 can buy alot last year but not alot this year...will buy less next few years... 
Best is to make money using money and ROI at least 10% and above...not the interest rate of 4.x%... |
My comment below is base on my opinion, and also maybe only applicable to my situation…
Fix Deposit
Agree that fix deposit interest is not a high return investment but at least right now the interest rate is very much higher compare to the past twenty over years with interest of less than 1.5%.
With banks currently giving a fix deposit interest of 4.x%, it can be considered as a moderate return on investment.
Furthermore fix deposit placement is considered as a safe haven, as the
principal amount is protected and the
interest is guaranteed (as long as placement till date of maturity).
In addition, it is also
insured by Singapore Deposit Insurance Corporation, for up to S$75,000 per depositor.
(in the event that the bank becomes bankrupt)
Financial products that are not insured by Singapore Deposit Insurance Corporation include foreign currency deposits, structured deposits and investment products such as unit trusts, shares and other securities.
Inflation Rate
If we refer to the past twenty years inflation rate history in singapore, most of the years have inflation rate of less than 3%, only with the exception of year 2008, 2011, 2012 and this year 2022 which exceeded 3%.
However, some of the years do also have
deflation like in year 2015, 2016 and 2020. (things become cheaper to buy)
In spore, most years are having less than 3% inflation, some years more than 3% and some years have negative inflation (deflation), so the average inflation will be about 3% plus minus.
Value of money
Hence, in order that my money to retain its value over time, it must generate a return that is higher than the average inflation rate of 3% plus minus.
Therefore for a fix deposit that gives 4.x% return is still can be considered as acceptable to me.
On the other hand, ROI that gives more than 10% are usually investment that is
mostly not capital protected and also not profit guaranteed. Such investment is also subjected to risk of losing money too.
Return on investment
Risk and return are directly related.
The greater the risk that an investment may lose money, the greater its potential to get a higher return.
Therefore everyone has his/her own risk limit to consider as each of us have different financial situation...
I am a low risk taker and I will be contented with a return that exceeded the average inflation rate.