With interest rates rising, fixed deposits have yielded higher returns over the past 12 months. Consequently, many people feel pressured to invest their savings in guaranteed bank accounts. Although having sufficient savings and readily available funds is ideal, many are opting for fixed deposits due to the security they provide, especially since real estate and stock investments can be hazardous.

But is it wise to put all your savings into fixed deposits? Let's investigate.

Safe May Not Always Be Safe

The possibility of banks defaulting is no longer remote, particularly in light of the failures of SVB, Signature Bank, and Credit Suisse. This raises the prospect that neither "safe" nor "guaranteed return" are truly guaranteed. The Deposit Protection Scheme applies to banks; however, its limitations aren't very high. This implies that if your bank fails and you have more than a set amount in a fixed deposit or even just your bank account, you will only get money up to that limit.

Money Cannot Stop Inflation

Any trustworthy financial advisor serving British nationals in Singapore will inform you that when you place money into a fixed deposit, all you get is the amount that is guaranteed—neither more nor less. Despite the appearance of benefit, this is not the case. In actuality, your money's purchasing power decreases in an environment of high inflation, as it has been in recent years. There has been and will continue to be inflation, and bank deposits, unlike stocks, have not been able to keep up with this trend.

Thankfully, you can prevent this by setting aside money and investing it in several banking organizations. Additionally, portfolio investment allows for risk diversification. In the long run, this could help you fight inflation and achieve large returns. The current market turbulence has highlighted the significance of diversifying and making long-term plans to reduce risks. In the short run, fixed deposits are a wise choice, but you run the risk of losing money if you invest solely in them. By concentrating all your investing, savings, and financial planning in one bank or one bank account, you are not diversifying, missing out on potential higher profits, and taking a significant risk since your bank might fail.

Money is essential for day-to-day living, but it's not as important for long-term, effective planning.

Conclusion

It's difficult to find trustworthy financial adviser for British citizens in Singapore and tax advice for British expats in Singapore. While doing some initial web research is a great idea, we advise speaking with a qualified financial advisor after you have obtained some fundamental knowledge. By doing this, you'll maximize profits and save a ton of time, money, and effort.