facebookSyfe Cash+ Guaranteed vs StashAway Simple Guaranteed: Risks, Returns and More

79

shares

301024 Syfe Fixed Deposit vs StashAway Fixed Deposit Interest Rate

Syfe Cash+ Guaranteed vs StashAway Simple Guaranteed: Risks, Returns and More

profileJustin Oh

First, there were Insurance Savings Plans. And then came along Cash Management Accounts.

Now, we have another new kid on the block with Syfe Cash+ Guaranteed and StashAway Simple Guaranteed, currently offering guaranteed returns of 3.5 to 3.75 per cent p.a.:

Guaranteed Cash Management Portfolios

But what’s with their product names having “guaranteed” in their names? Are they really?

Source: Giphy

Here’s all you need to know about cash management portfolios from Syfe and StashAway!


TL;DR: Syfe Cash+ Guaranteed vs StashAway Simple Guaranteed – Risks, Returns and More

 Syfe Cash+ Guaranteed StashAway Simple Guaranteed
Returns (p.a.) (lock-in period)3 months: 3.75%
6 months: 3.75%
12 months: 3.50%
1 month: 3.50%
3 months: 3.75%
6 months: 3.60%
12 months: 3.50%
Minimum Investment AmountNone$1
FundingCashCash/SRS
FeesNone
LiquidityNone (Withdrawal only at end of term)
InsuranceNo SDIC coverage on an individual level.

Up to $100,000 SDIC coverage applies to the bank account(s) used by the company.
Underlying InvestmentsFixed deposits with a bank

Jump to:

Disclaimer: This is a non-sponsored article. The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. ​Readers should always do their due diligence and consider their financial goals before investing in any investment product.


What Are Guaranteed Cash Management Portfolios?

Guaranteed cash management portfolios are investment products that invest your funds into fixed deposits at partner banks.

When you invest in them, you will be locking up your cash for a fixed period and enjoying a guaranteed fixed rate of return.

But wait, how is this different from investing in a fixed deposit directly? Here’s a table to explain the key differences:

Investment Product"Guaranteed" Cash Management PortfolioFixed Deposits
Tenure/Term3 - 6 monthsUp to 24 months
LiquidityNone (withdrawal only at end of term)High (but with fees)
Minimum Investment AmountNone or as low as $1Typically $5,000 and above depending on bank
InsuranceNo SDIC coverage on an individual level.

Up to $75k SDIC coverage applies to the bank account(s) used by the company.
Insured by SDIC up to $75k on an individual basis

One key difference I would like to highlight is that there is absolutely ZERO liquidity when investing in these guaranteed cash management portfolios. This means you can neither withdraw nor top-up your funds invested until the term ends. So ensure you don’t need that money for the specified period.

Are My Funds Safe?

The most important thing to know about these guaranteed cash management portfolios is their associated risks, as with any investment you make! You are subjected to the underlying bank risk when your funds are invested in fixed deposits.

Unlike fixed deposits insured by the Singapore Deposit Insurance Corporation (SDIC) up to $100,000 per bank per person, the SDIC coverage for guaranteed cash management accounts is not applicable on an individual basis.

For the uninitiated, SDIC protects our deposits in case a financial institution like a bank collapses. You may read about it more here:

Okay, so our funds are not directly protected by SDIC on an individual basis. How safe are they, then?

Well, it’s still pretty safe but not as safe as investing directly into a fixed deposit.

For guaranteed cash management portfolios, the bank account(s) used to manage your funds are SDIC-insured on a firm level.

Both Syfe and StashAway are licensed by the Monetary Authority of Singapore (MAS) and work with reputable banks, so I wouldn’t worry too much. It’s important to note since we should fully understand what we are investing in.

How Are There No Fees?

Some may also wonder how there are no fees involved. The answer is pretty simple. Since our funds are invested in fixed deposits, financial institutions like Syfe and StashAway take a slight margin before offering you the rate you see.

For example, if the underlying fixed deposit rate is 3.7 per cent, they may offer you a 3.5 per cent guaranteed rate while taking the 0.2 per cent as profit. As bank rates aren’t fixed and fluctuate, these firms use the profit to cover operational costs and guarantee a lower rate for us clients.

Now that we understand the fundamental differences between fixed deposits and guaranteed cash management portfolios let’s dive into the products themselves.


Syfe Cash+ Guaranteed

First up, we have Syfe Cash+ Guaranteed by digital wealth manager Syfe.

Syfe Cash+ Guaranteed Returns & Lock-in Periods

TenorRate, p.a.
3 months3.75%
6 months3.75%
12 months3.50%

Do note that you cannot withdraw your funds from Syfe Cash+ Guaranteed until the end of the lock-in period.

Minimum/Maximum Investment

There is no minimum investment nor investment limit for Syfe Cash+ Guaranteed.

Fees

None.

Risks

Apart from the SDIC and underlying bank risk mentioned above, Syfe Cash+ funds are held in a separate custodian account with HSBC. This means that Syfe will never be able to use your funds for any reason and that your funds remain safe even if Syfe stops operating because they are held separately from Syfe assets.

StashAway Simple Guaranteed

Next, we have StashAway Simple Guaranteed by robo-advisor, StashAway.

StashAway Simple Guaranteed Returns & Lock-in Periods

TenorRate, p.a.
1 month3.50%
3 months3.75%
6 months3.60%
12 months3.50%

Do note that you cannot withdraw your funds from StashAway Simple Guaranteed until the end of the lock-in period.

Minimum/Maximum Investment

For StashAway Simple Guaranteed, there is a $1 minimum investment amount and no investment limit. You may also invest with your SRS.

Fees

None.

Risks

Apart from the SDIC and underlying bank risk mentioned above, StashAway Simple Guaranteed funds are invested in fixed deposits with Citibank N.A., one of the top three largest banks globally and a Global Systemically Important Bank (G-SIB).


Who Are Cash Management Portfolios For?

With many low-risk investments to pick from these days:

It is tough to figure out who cash management portfolios are for. With virtually no minimum investment amounts, they look to be great for students or adults with pockets of spare change to invest.

As of now, they also seem to offer better returns than fixed deposits with the drawback of zero liquidity. Then again, if you were looking for returns, cash management accounts might suit you better with the caveat that interest rates fluctuate.

All in all, I would say that cash management portfolios are for those who just want to park a sum of money away for higher interest than fixed deposits but forgo liquidity and the SDIC coverage on an individual basis.

Should you pick Syfe or StashAway? This depends on how long you can set aside your money, as both offer similar returns. Currently, StashAway has the upper hand with its variety of tenors and is the sole provider that allows you to invest your SRS monies.

Related Articles:

profile
About Justin Oh
Your average Zillennial who is obsessed with anime, games, movies and of course, personal finance. Join me as I break down personal finance into easily digestible and fun bits!
You can contribute your thoughts like Justin Oh here.

🔥 What's Popular

    • Loading articles
    • Loading articles
    • Loading articles
    • Loading articles
    • Loading articles
    • Loading articles

Stay updated with the latest finance tips!

Receive bite-sized finance on Telegram here.
💬 Comments (0)
What are your thoughts?

No comments yet.
Be the first to share your thoughts!

🔥 What's Popular

    • Loading articles
    • Loading articles
    • Loading articles
    • Loading articles
    • Loading articles
    • Loading articles

Join our Community!

Discuss your thoughts with like-minded members in these community groups!

Stay updated with the latest finance tips!

Receive bite-sized finance on Telegram here.