If the job market is still slow and inflation keeps rising, you might want to find a safe and effective place to park your money. Money market funds Singapore banks can offer are the best investment instrument for hedging inflation, according to a study conducted by Singaporean investors, who allocate a mean of 70% of their investment portfolios to these instruments. We shall address the following queries in this post to give you a better understanding of money market funds in Singapore:
Money Market Funds: What are They?
Money market funds are a type of mutual fund that focuses on investing in highly liquid, short-term products. These include cash and cash equivalent securities, and debt-based assets with short maturities, such as Singapore government T-bills, and high credit ratings.
Money market funds are also referred to as parking funds because many investors use them as a location to hold onto their cash while they consider making other investments or to cover unforeseen short-term expenses. You might put money into a money market fund, for instance, if you are saving for a down payment on a house or vehicle.
Money market funds in Singapore often allocate their investments towards short-term, low-risk, highly liquid securities like Singapore government T-bills, MAS bills, and fixed deposits. Nonetheless, money market mutual funds should not be viewed as risk-free investments in lower-risk assets.
Pros of money market funds in Singapore
Shorter duration and reduced risk
Money market mutual funds are always thought to have less risk than equities and bonds because the former track extremely volatile assets while the latter primarily invest in low-risk securities like Singapore government T-bills.
Furthermore, it might be the best choice for a brief period. Before deciding which long-term funds to invest in, investors with long investment views should think about putting their money in money market funds.
Higher liquidity
One other benefit of money market funds may be their high liquidity. Money market funds, which prioritize assets and/or securities with relatively high demand, are typically very liquid and offer investors a high degree of financial flexibility.
Diversified holdings
A diverse portfolio of corporate, tax-free, and government debt instruments makes money market funds an excellent tool for investors looking to diversify their holdings all at once. Investors don’t need to pick and buy different money market assets one at a time.
Reasons to invest in money market funds in Singapore
There is no one-size-fits-all financial product, and money market funds are not always the best option for everyone. Examining each of the several justifications for investing in money market funds in detail may aid you in making an informed decision.
Goals for Short-Term Investments
If you want to invest for the short term, money market funds are an excellent option. Their investments are good for short-term financial demands because they usually mature quickly. Money market funds provide a reasonably safe and hassle-free method to manage your cash, whether you need to pay payments soon or want to keep your money set aside for unexpected chances.
More secure and liquid
This suggests that managing cash would be a safer investing option than exchange-traded funds (ETFs), as money market funds are typically safer than stocks. Another argument for a somewhat more secure and liquid investing option would be money market funds. Their primary investments are in short-term, low-risk assets, including certificates of deposit from banks and government securities. Hence, money market funds may be of interest to investors who place a high priority on both security and prompt access to their cash.
Although money market funds are well-known for their safety and liquidity, they are meant to be utilized as investment products rather than regular savings accounts. Otherwise, the Singapore Deposit Insurance Corporation (SDIC) does not guarantee the capital.
