Not so long ago, cash management is simply placing it a high yield bank account such as DBS Multiplier, OCBC 360 or UOB One. But with the rising interest rate, there are now a few other viable options such as fixed deposits, SSBs and T-bills.
These options came at the right time for me since I am having 3 years of cash for liquidity as I set out to explore my new phase of life. So instead of just 1+% interest just half a year ago, now I can get more than 3% interest for my cash! So I was thinking how I am going to manage the cash so that it can work with my draw down plan. The two factors that affect my decision is liquidity and interest rate. Given that I am not going to have any regular income, I must ensure I will have sufficient cashflow for daily living and earning higher interest for cash not for immediate use.
The table summarises the two factors for the various options.
|UOB One||Available immediately||~1.4%|
|Singapore Saving Bonds||Available in one month||3.26%|
|T-bills||Available in 6 months||4.19%|
While one can earn up to 3.6% with UOB One account, for the amount I am going to leave with them and my transactions with the bank, the interest I am likely to get would be around 1.4%, including the cash rebate from credit card.
Based on the above factors, this will be my plan. I will have about 6 months of expense in my various bank accounts but mainly in UOB One. 18 months of expenses in Singapore Saving Bonds and 12 months of expenses in T-bills. Obviously it will not stay this way throughout the year as I draw down on my savings. Hopefully I am able to hit the target return for my investment and then this model can recur annually.
Currently I have about 15 months of expenses in SSB and 7 months in T-bills. Given the current high demand for SSB and I am redeeming my earlier tranches, I hope I can achieve the above allocation by next March.