SG Interest Rates Are Dropping Again. Here’s What I’m Doing With My Money Now

If you're anything like me, you probably had a tiny moment of panic when you saw the news about interest rates in Singapore dropping, again (alamak).

But instead of spiralling (ok lah, maybe for a brief moment), I decided to reassess my finances and figure out what an average Singaporean like me can realistically do.

I'm not a financial advisor, just a regular person figuring things out as I go. So please don't take this as financial advice — I'm just sharing what's been working for me so far.

1. I'm exploring USD savings accounts

One of the first things I started looking into were USD savings accounts. If Singapore dollar interest rates are dropping, maybe it's time to see what other currencies are offering. And right now, USD accounts are still giving relatively decent returns compared to local options.

I've personally been using Chocolate Finance (if you can get a referral, that's a plus), which makes it pretty easy to hold USD and earn interest.

But remember that exchange rates matter a lot. Let's say you convert SGD to USD when the exchange rate is not great. Even if you earn higher interest, you could lose out when converting back, so it's important to know what potential range of losses you can take from currency fluctuation. For instance, if I'm getting returns of up to 4% on my savings, I am comfortable with taking up to 1% in foreign exchange losses, as the net gain is still superior compared to local savings accounts.

What I'm doing now is converting gradually when the rates are good, not all at once.  I also keep some SGD as my emergency fund. Another tip: only convert funds that you can afford to park for a long time so that you're not forced to convert them back to SGD at a loss when you need some liquidity.

2. I'm actively hunting for "new-to-bank" promos

This one feels a bit like a "game", honestly. Banks in Singapore are always trying to attract new customers, which means they will offer promos like $XXX amount of cash back for opening a new account, and/or limited-time higher interest rates (at least for the first few months, plus you have to deposit a set amount).

I used to ignore these because they felt like too much effort. But now that interest rates are falling, every little bit helps. You just have to be proactive and keep track of the promotions (and T&C's, of course).

You could do your research through personal finance aggregators such as Moneysmart, Singsaver and Seedly, or personal finance blogs. It will likely help you narrow down the best promotion at the moment.

3. I'm topping up my CPF SA and SRS (yes, really)

I suppose this is the most boring option on the list, but it makes financial sense. The interest rate for the CPF Special Account (SA) is guaranteed at 4% for now, which is honestly quite solid considering current conditions. I've started to top up my SA when I have extra cash (such as my yearly bonus) and treat it as building my retirement nest egg. It's not money I'll touch anytime soon anyway, so I might as well let it grow somewhere stable.

The Supplementary Retirement Scheme (SRS) is another one I used to ignore… until I realised the tax savings. While the SA allows you to reduce your taxable income base by a maximum of $8,000 per annum, supplementing it with the SRS allows a further reduction of up to $15,300 per year. By contributing to SRS, I reduce my taxable income and I get more flexibility in how the money is invested later. SRS funds can currently be invested in Singapore Savings Bonds, local/foreign currency fixed deposits, unit trusts and certain ETFs.

It's not exciting, but it's one of those “I'm sure that my future me will thank present me” moves.

4. I'm paying more attention to high dividend stocks

Disclaimer: I'm not a stock-picking guru. I still keep things pretty simple, choosing long-term gains. But here's what I like about high dividend stocks:

• They provide passive income (hello, extra cash for discretionary spending)
• They tend to be more stable than growth stocks (generally)
• They feel a bit like "upgraded savings accounts" but with risk, of course.

I've been focusing on REITs (real estate investment trusts) and blue-chip companies with a consistent dividend history. This is just one cornerstone of my overall strategy. Dividends are nice, but be aware that markets can still go up and down. Invest based on your own risk appetite and what you can "afford to lose".

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