After more than a year of high deposit rate frenzy, market expectations are building up for possible rate cuts by the US Federal Reserve in the coming months of 2024.  Local banks are now offering a meagre annual fixed deposit rate of 0.05% for any deposit exceeding S$20,000, regardless of the duration of the deposit. This minimal rate stands at the same as the flexible deposit rate offered by some banks. Even the best fixed deposits–on limited-time promotion–on the market are seen fleeting, prompting depositors to think about the possibility of more local banks reducing deposit rates.  At the juncture of cash yields declining, let’s revisit what depositors earn from fixed deposits and what the limitations are. 

Fixed deposit gives a sense of security, but at what cost?

Traditionally, fixed deposits have been the go-to choice for conservative investors. The appeal is straightforward: guaranteed returns.  This is probably seen as...