3 best ways to safely invest $1000 for 6 to 12 Months and fight inflation

When you have $1000 to save and want to put it away in a safe haven for 6 to 12 months, there are several options to consider. While it's important to prioritize safety, you also want to ensure that your money grows and preserves its value. In this article, we will explore some of the best options for investing your $1000 for a short-term period. Most importantly, there are insured and principal protected to $75k by the Singapore Deposit Insurance Corporation or in short SDIC.

In order of my personal preference, I go for the high yield savings account (up to 3.85% and stretch to about 7.8% but effective interest is only 5% with UOB One Account), followed by T bills and then fixed deposit (some know it as certificate of deposit in the US and other countries)

1. High-Yield Savings Account

A high-yield savings account is a secure and convenient option for short-term savings. It offers a higher interest rate compared to a regular savings account, allowing your money to grow over time. Look for accounts with no monthly fees and competitive interest rates. Keep in mind that the interest rates may vary, so it's essential to compare different options before making a decision. I mentioned about the UOB One Account which offers 3% upwards or the Standardchartered Jumpstart Account which is so easy that your baby brother can get it going without breaking sweat (just kidding, he needs to be 18 years old to apply).

I like this because of the ultra liquidity if I need to pull money at any instance. Paying for a quick buy or turning the money around to place an investment in another asset class. You get easily 2% with the SC Jumpstart account if you are want to move this fast or go for the UOB One Account if you are game enough to complete a few missions to get up to 7.8%.

2. Singapore Savings Bonds (SSBs) and T-bills:

Consider investing in Singapore Savings Bonds issued by the Monetary Authority of Singapore (MAS). SSBs are low-risk government bonds with a tenor of 1 to 10 years. They offer a higher return compared to regular savings accounts, and you have the flexibility to redeem your investment anytime with no penalty after the first year. Check today rate.

I like this because I get a piece of mind knowing that my money is "locked away" and growing. But there is a minimum locked in period. Great for instilling financial discipline for people who feels they need to spend their money on advertised low air fare and exotic travels that really present the not-to-be missed deals of the century type. If you fall into one of these categories, put your money here. Minimum, $500 to start. Just remember to apply for your (Central Depository) CDP account first. Think of your CDP account as your e-wallet to track your e-money for investment expected by our financial institution. PR/ Singaporean and Foreigners welcome.

T-bills that can pay you well in 6 or 12 month terms. This means you can invest your money in a short 6 months "locked in" or go for the longer version at 12 months "locked in". As of this writing, you get above 3% upwards. Minimum, $1000 to start using your internet banking account. Just remember to apply for your CDP account first.

I really like this because I get the interest upfront (literally in my face). If I invest $1000 with a 3% per year return, they deducted $970 from my linked bank account. You get to keep the $30 immediately. If I invest $10,000, only $9700 will be deducted. How cool is that? I take that $300 and invest it again to achieve the compounding effect. Remember, money today is worth more than the money you collect a day, a month or a year down the road. One of my favourite money making machine.

3. Fixed Deposits with Local Banks:

Explore fixed deposit options with local banks in Singapore. Fixed deposits offer a fixed interest rate for a specified period, making them suitable for short to medium-term savings. Be sure to compare interest rates and terms offered by different banks.

• The best 12-month fixed deposit rate was 3.30% p.a. offered by State Bank of India (SBI). The best 3-month fixed deposit rate I found was 3.50% p.a. offered by Citibank. (min. $50k)
  

• The best 6-month fixed deposit rate was 3.55% p.a. (min. $50k), which is comparable to the cut-off yield of the latest 6-month T-bill auction as of 2 Feb 2024.
  

The highest fixed deposit rate of 3.50% - 3.55% is great if you have $50k and you are willing to keep it there for 6 to 12 months.

For the rest of us who wants to start at $500 or $1000, I say we go for DBS (min. $1k, 3.2%) or Bank of China (min. $500, 3.45%) and ICBC (min. $500, 3.35%).

I like fixed deposit because we are reminded that we should practise delayed gratification with penalties (0.5 - 1% of sum invested) for taking the money out before maturity.

Before making any investment decision, it's crucial to evaluate your risk tolerance, financial goals, and the liquidity needs for your $1000. Consider consulting with a financial advisor who can provide personalized advice based on your specific circumstances.

In conclusion, when looking to invest $1000 for a short-term period, prioritize safety while aiming for growth. Explore options such as high-yield savings accounts, treasury bills/ Singapore savings bond or fixed deposits. Each option has its own advantages and considerations, so make sure to do thorough research and choose the one that aligns with your financial goals and risk tolerance.

Personal Opinion Disclaimer:

The opinions expressed here are solely my own and do not constitute financial advice. I am not a licensed financial advisor, and the information provided is based on my personal experiences, research, and perspectives.

It's important to recognize that individual financial situations vary, and what works for one person may not be suitable for another. Investment decisions should be made after careful consideration of one's own financial goals, risk tolerance, and circumstances.

I encourage readers to consult with a qualified financial professional for personalized advice tailored to their specific needs. My views and opinions may change over time, and I assume no responsibility for any actions taken based on the information provided.

Investing involves risks, and past performance is not indicative of future results. I disclaim any liability for any direct or indirect losses or damages that may result from the use of, or reliance on, the opinions expressed here.