If you find that interest rate is too low in Singapore and you wish to earn a higher interest rate by investing in foreign currency, e.g. Australian dollar, you should be aware of the following:
- You have to bear the risk of currency fluctuation
- You have to incur the cost of converting your Singapore dollars to the foreign currency and to convert back to Singapore dollars on maturity
My preference is to invest in blue chip shares, REITS or the STI ETF. You can find shares that give an attractive dividend yield of 3% or higher and enjoy the benefit of capital appreciation. Although these shares may be risky in the short term, the risk is reduced considerably for a long term investor. These concepts are explained in the FISCA workshop on financial planning. Register here.