There are many options out there for earning higher guaranteed interest than what the bank has to offer without risking our capital, such as fixed deposits, Singapore Savings Bond (SSB), or T-Bills. However, there are a few that offer high interest (more than 3% per annum) yet allow fast withdrawal.
So, in this post, I want to share where I have been saving my cash for high-interest and easy withdrawal, and it is in my brokerage account, Interactive Brokers (IBKR), which offers 4.83% for any amount minus the first $10,000. I have shared previously the reasons why I am using IBKR as the platform for options trading.
Based on the spare cash I have idling in my brokerage account, coupled with the total Net Asset Value (NAV) of my account, I can enjoy a blended rate of 4.312% on my spare cash.
Do note that the NAV must be above USD100k to enjoy the best interest rate of 4.83%. Otherwise, it will be a lower interest, proportional to the NAV amount.
The withdrawal is relatively straightforward and quick. I added my bank account number to receive the withdrawal amount and usually receive it the following day.
Concluding Thoughts
If you are looking to earn a higher interest on your idle cash/ emergency funds, you may want to consider putting them in the brokerage. I am currently using the advance premium that I received from my options contract to earn interest while they idle in my brokerage account. Lastly, the scenario of the brokerage going bust is one possible risk that we should be aware of, though it is a low possibility.
If you need a referral link to sign up to earn some rewards, you can use mine:
https://tinyurl.com/pmj9fvra
*** Updates ***
I have received a few queries regarding this post and I would like to share the answers here for the benefit of everyone.
Q1: Must the cash deposit be in USD or can be in another currency?
The interest rates for the various currencies and to enjoy the interest rate that I have mentioned in this post, it has to be in USD.
You can use the currency converter in IBKR to convert the cash in your preferred currency to USD to earn higher interest and convert it back if you need to withdraw the money in your preferred currency.
Q2: What is the withdrawal fee?
IBKR allows one free withdrawal every month and subsequent withdrawal will be charged at USD1 per transaction.
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Do I need to convert my S$140000 into US$ to enjoy 4.31% ?
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Oh yes you should, as SGD commands a lower interest rate than USD. You can check the rates here:
https://www.interactivebrokers.com.sg/en/accounts/fees/pricing-interest-rates.php
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