Many banks are now offering 3.2% to 3.5% on their fixed deposit. The return is guaranteed. What is the advantage of investing in Flexi-Cash or the Money Market Fund?
Our Flexi-Cash is invested in the money market. It pays a floating interest rate, that is based on the return from the short term investments in the money market. During the past few months, the average return is between 3% to 3.5%.
The advantage of Flexi Cash is its flexibility. You can withdraw your money at any time, without any penalty. There is no lock-in period.
I have invested most of my spare savings in Flexi Cash as I intend to withdraw it, without any penalty, to invest in the equity market later in 2007 (if it corrects from the current level).
If I put the money on 1 year fixed deposit, I have to wait for the maturity date (and may miss the market opportunity). If I withdraw earlier, I have to pay a penalty.
It is better to invest in a flexible fund, with no penalty on early withdrawal.
It is also easy to transfer from Flexi Cash to Flexi Link (to be invested in the Combined Fund), as they are both managed by NTUC Income.
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