It doesn't pay to save

He also works in Shenton Way.

Huh? Well at least for next few years where we should be experiencing negative real interest rates.



What is negative REAL interest rate?
Real interest rate = Nominal rate less inflation rate


So a negative real interest rate is when the gross interest interest rates that you are getting from your Bank for your saving account and fixed deposit are generally lower than the inflation rate.



The inflation rate is expected to be 1% to 2%.



If you let your monies sits in your saving account, your monies would buy less less things as any interest earned is outstripped by climb in consumer prices.



For example, DBS Bank offers to pay 1.8% per annum for $50,000 - $99,999 24-month fixed deposit.



I am not discouraging the age old good habit of saving.



But I am highlighting the need for you to aggressively manage your monies ie. to seek out investment opportunities which could yield higher than inflation rate at a risk level acceptable to you.



Bottomline - It doesn't pay to save amid rising inflation, low bank rates. Ask your money to work harder.