StashAway launched a new cash management product called Simple Guaranteed on 24 April 2023. This is in addition to its 2 existing cash management products, Simple and Simple Plus. In this post, I’ll review Simple Guaranteed and compare it against other options in the market.
Read: StashAway launches third cash management portfolio with fixed deposit holdings, daily-reviewed rates
Update as of 19 Dec 2023: Simple Guaranteed 3-month tenure yield has increased from 3.8% to 4% p.a.
Product Highlights (updated 19 Dec 2023)
- No minimum or maximum amounts
- No fees
- Lock in options for 1, 3, 6, or 12 months
- Rate is guaranteed once locked in
- Underlying is fixed deposit at MAS regulated banks
- Not covered under SDIC (refer to FAQs)
Market Comparison
Within StashAway Simple products, Simple Guaranteed invests in fixed deposit vs Simple and Simple Plus that invest in money market funds and bond funds. Simple and Simple Plus don’t have any lock-in periods.
StashAway Simple has lower projected rate of 3.7% (after fees), so it’s not as attractive as StashAway Guaranteed. Simple Plus has much higher projected rate (yield to maturity) of 4.9% after fees, but comes at higher risk, being invested in bond funds.
Comparing to other fixed income products currently in the market, Simple Guaranteed’s 4% is actually pretty attractive vs T-bills (latest 6-month T-bill auction on 20 Dec 2023 had a cut-off yield of 3.73%). Another alternative is Syfe Cash+ Guaranteed which also offers up to 4% yield.
See my compilation of fixed income options in my Fixed Income Tracker.
Most other banks offer fixed deposit at higher rates, but keep in mind those usually require minimum placement amounts of $10k (except DBS $1k min and BOC $5k min). Since Simple Guaranteed locks in for the chosen tenure (1, 3, 6, or 12 months) without option to terminate, it is more similar to 6-month T-bills but more risky since it is not covered by SDIC.
My Thoughts
IMO, the main advantage of StashAway Simple Guaranteed is that there is no minimum or maximum amount for placements.
Tenures have recently been expanded to include 1, 3, 6, and 12 months.
In addition, the rate of 4% offered is has actually become pretty attractive vs other safer options, as yields have fallen recently.
The main downside is that Simple Guaranteed is not covered by SDIC and the risk depends on underlying bank.
If you have at least $1k, I would think that 6-month T-bills might still be more attractive if you prioritise safety. There are auctions for the 6-month T-bills every 2 weeks. T-bills are similarly locked up for its tenure and cannot be redeemed early (although can be sold in the secondary market but with poor liquidity). One thing to note though, that T-bill yields have been falling recently.
Personally, I’ve put a total of $11k into Simple Guaranteed for 3-month tenures ($1k at 3.8% and recently added another $10k at 4.0%).
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Disclaimer: This is not financial advice. I am not professional financial advisor nor do I work in the finance industry. Anything I write here is purely my personal opinion. Please do your own research and due diligence before investing into anything. All investments come with associated risks. Best to consult a financial advisor if you’re still unsure.
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