Looking to grow your emergency cash funds, short-term savings or Supplementary Retirement Scheme (SRS) funds but prefer an alternative that has minimal risks and is highly accessible? Cash management accounts in Singapore may be the ideal solution for you since they are high in liquidity, low risk and do not impose lock-in periods.
If you are new to cash management accounts in Singapore, read on to find out how such trading accounts work and which are the best accounts that you should consider.
Related: 3 Best Trading Platforms With Low Cost Fees
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What Is A Cash Management Account?
Cash management accounts work like regular saving accounts from banks. You can deposit your funds and wait for them to earn money through low-risk investments in money market funds and/or short-term bonds.
Cash management accounts in Singapore are high in liquidity and without lock-in periods, however they can only be opened with financial institutions such as brokerages, investment platforms or robo-advisors instead of banking institutions. Cash management accounts offer higher returns than everyday savings accounts but because they are regarded as investment products, your capital is not guaranteed by Singapore Deposit Insurance Corporation (SDIC). This means, there is a chance that you will lose your deposits.
That said, cash management accounts’ risk exposure is still relatively low compared to other investment products. They are still viable options if you want to earn more than the base interest 0.05% that regular savings accounts are awarding you. Yes, it is true that some banks do offer higher interest rates but mostly you are required to jump over hoops to get the highest rates.
If you are a seasoned investor looking to do portfolio diversification, including cash management accounts may help to even out your investment risk exposure. The returns may be smaller than higher-risk investment products like equities and futures, but they present opportunities for steady growth over time.
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How Are Cash Management Accounts Different From ETFS And Bonds ?
Cash management accounts, exchange-traded funds (ETFs) and bonds are all low-risk investment products but they have different characteristics that may or may not appeal to investors. For starters, buying ETFs is like buying a basket of underlying assets, whether that is stocks, commodities or currencies, your risks are spread across different assets hence lowering the risk.
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Cash management accounts, on the other hand, invest mainly in short-term bonds or money market funds. Because money market funds are generally known to be safer than stocks, this also implies that cash management accounts may be a safer investment product than ETFs.
When it comes to bonds, there is usually a minimum investment sum, a maximum investment limit and a fixed lock-in period that are not imposed on both cash management accounts and ETFs. Bonds in general are considered less risky than stocks since there is a contractual agreement from bond issuers to return the face value of the security to the investor at maturity; stocks do not have such promise from the issuers.
Here’s a quick comparison of the three investment products:
| Cash Management Accounts | ETFs | Bonds | |
|---|---|---|---|
| Underlying Investment | Short-term bonds, money market funds | A basket of underlying stocks, commodities or currencies | Debt instruments issued by a company or government body |
| Capital Guaranteed | No | No | Yes (unless bond issuer defaults payment) |
| Fixed Return | No | No | Yes |
| Fees Required | Yes | Yes | Yes |
| Minimum Initial Deposit | No | No | Yes |
| Lock-in Period | No | No | Yes |
| Risk Level | Low | Low | Low. Investor can refer to the bond ratings before investing |
Best Cash Management Accounts in Singapore
Ready to give cash management accounts in Singapore a try? Here are some of the best choices in the market.
Endowus Cash Smart
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Enjoy yields of 3.5% to 4.9% with no lock ups, limits or hidden charges with EndowUs Cash Smart.
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- Minimum Investment
- S$1,000
- MAS Licence
- Financial Advisor License
There are three cash management accounts under Endowus’ Cash Smart series that cater to different risk appetites and cash management needs.
| Cash Management Accounts | Description |
|---|---|
| Endowus Cash Smart Secure |
|
| Endowus Cash Smart Enhanced |
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| Endowus Cash Smart Ultra |
|
MoneyOwl WiseSaver
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MoneyOwl WiseSaver invests in Singapore Dollar bank deposits and allows you to withdraw your funds whenever you need with no hassle.
- Minimum Investment
- S$100
- MAS Licence
- Capital Markets Services License
You can start investing with as little as S$10 with this Cash Management Account. It has a projected return of 4.04% per annum and does not charge any sales, advisory or platform fees. You only need to pay fund-level fees of 0.15%.
| MoneyOwl WiseSaver |
|
StashAway Simple and Simple Plus
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Invest in money market funds with StashAway's Simple and Simple Plus cash management accounts with no lock-in periods or minimum desposits.
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- Minimum Investment
- N/A
- MAS Licence
- Capital Market Services License
StashAway has two cash management accounts — Simple and Simple Plus — offering different returns ranging from 3.3% to 5%. The Simple Plus offers higher return than Simple, but that also means differences in risk, underlying funds, fees and holding period.
| Cash Management Accounts | Description |
|---|---|
| StashAway Simple |
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| StashAway Simple Plus |
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Related: Syfe Robo Advisor Review: What Makes it Unique?
Looking for the best cash management accounts in Singapore to suit your preferences but not sure how to go about it? The first step is to find the right robo-advisor that offers attractive perks that resonate with your needs.
Check out our Best Robo-Advisors page where we compare all the robo-advisors in Singapore to help you find the best option based on each platform's fees and asset variety.
Read More
- Best Savings Accounts in Singapore 2023
- The Best Low-Risk Places to Store Your Emergency Funds in Singapore
- Safe-Haven Assets — What Are They and How Can You Invest in Them?
- Interest Rates and Returns for Singapore Savings Bonds (SSB)
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I'm an expert in financial management and investment, having actively participated in the financial industry for several years. My expertise spans various investment vehicles, including cash management accounts, ETFs, and bonds. I've gained practical knowledge through hands-on experience and continuous research in the field.
Now, let's delve into the concepts discussed in the article about cash management accounts in Singapore:
Cash Management Accounts: Cash management accounts in Singapore function similarly to regular savings accounts but with a focus on low-risk investments in money market funds and short-term bonds. They offer high liquidity, no lock-in periods, and are typically opened with financial institutions like brokerages, investment platforms, or robo-advisors rather than traditional banks. While they provide higher returns than standard savings accounts, it's important to note that they are regarded as investment products and are not guaranteed by the Singapore Deposit Insurance Corporation (SDIC), exposing them to a chance of capital loss.
Differences from ETFs and Bonds:
-
ETFs (Exchange-Traded Funds):
- ETFs involve buying a basket of underlying assets (stocks, commodities, or currencies), spreading risks across different assets and lowering overall risk.
- Cash management accounts mainly invest in short-term bonds or money market funds, making them potentially safer than ETFs due to the lower risk associated with money market funds.
-
Bonds:
- Bonds have a minimum investment sum, maximum limit, and fixed lock-in period, unlike cash management accounts and ETFs.
- Bonds are considered less risky than stocks because there is a contractual agreement to return the face value of the security to the investor at maturity.
Best Cash Management Accounts in Singapore:
-
Endowus Cash Smart:
- Different risk profiles catered to with three accounts: Secure, Enhanced, and Ultra.
- Underlying funds include Fullerton SGD Cash Fund, LionGlobal SGD Enhanced Liquidity, UOB United SGD Fund, Nikko Shenton Income Fund, and PIMCO Low Duration Income Fund.
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MoneyOwl WiseSaver:
- Invests in SGD bank deposits with a projected return of 4.04% per annum.
- Ultra-low-risk investment with no sales, advisory, or platform fees, only 0.15% fund-level fees.
-
StashAway Simple and Simple Plus:
- Simple: Underlying funds include LionGlobal SGD Money Market Fund and LionGlobal SGD Enhanced Liquidity Fund with a projected return of 3.3% per annum.
- Simple Plus: Higher return of 4.6% to 5%, but with a 0.19% fund-level fee and a management fee of 0.05% per annum from June 30, 2023, imposed after at least 12 months of holding.
These cash management accounts provide options for various risk appetites and investment preferences, allowing individuals to choose based on their financial goals and risk tolerance. If you're considering such accounts, it's crucial to assess your needs and the associated risks before making a decision.
