BT Money Hacks: Smart cash moves for money mastery
Are you looking for safe and accessible short-term investment options for your excess cash? With interest rates falling, traditional fixed deposits might not be as attractive as they once were.
In the latest episode of Money Hacks by The Business Times, host Howie Lim, discusses why money market funds might be a better choice for your extra cash with her expert guests - Michele Ferrario, co-founder and CEO of StashAway, and Willie Keng, founder of dividendtitan.com.
Money Market Funds
Ferrario explains how money market funds invest in low-risk, short-term fixed income securities like Singapore dollar bonds and commercial papers. Keng adds that these funds also include high-quality corporate and government agency bonds.
Understanding the composition of money market funds can help you make informed investment decisions. This episode offers a comprehensive comparison between money market funds, fixed deposits, and short-term bonds.
The risk-averse options
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For risk-averse investors who usually opt for fixed deposits, the experts explain the additional benefits of money market funds, such as higher yields, safety of principal, and liquidity. Keng and Ferrario also delve into the nuances of short-term bonds, highlighting how interest rate fluctuations affect them differently compared to money market funds.
Both experts bring their extensive experience to the table, making complex financial concepts easy to understand. Keng shares real-world examples, discussing high-quality investment securities and government bonds issued by entities like the Public Utilities Board and Housing Development Board.
Ferrario breaks down the regulatory framework that allows money market funds to maintain stable prices, even when bond prices fluctuate.
Don’t underestimate diversification
Diversification is a key theme in this episode. Ferrario discusses the importance of having both a cash management solution and a diversified investment portfolio. He emphasises that while money market funds are great for preserving capital, long-term wealth building requires a mix of equities, bonds, and other assets.
Keng shares some practical tips for assessing the credit quality and fundamentals of the businesses behind bonds, while Ferrario highlights the risk of being too conservative with your investments - helping you make more informed choices.
Listen now to decode common myths and concerns about investing in fixed income products and understand why it is a misconception that all bonds are safe.
If you have feedback or an idea for a podcast episode, contact us at btpodcasts@sph.com.sg. Stay tuned for more episodes of Money Hacks with Howie Lim.
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Written and hosted by: Howie Lim (howielim@sph.com.sg)
With Michele Ferrario, co-founder and CEO of StashAway and Willie Keng, founder of dividendtitan.com
Edited by: Howie Lim & Claressa Monteiro
Produced by: Howie Lim & Chai Pei Chieh
A podcast by BT Podcasts, The Business Times, SPH Media
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