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Due to inflation, your cash savings will be worth less and less each year. For example, the Monetary Authority of Singapore (MAS) projects average core inflation to come in at 2.5% to 3.5% in 2024. This means every $100 you had in cash savings at the start of 2024 would be worth only be able to buy goods and services worth between $96.50 and $97.50 by the year-end.
Over time, inflation can significantly erode your purchasing power. Simplistically speaking, you need to earn a return on your savings to overcome the effects of inflation. One way is by investing in stocks, which can potentially generate higher returns for you. However, the financial market can be volatile – as you may have experienced in recent months.
You may wish to ride out market volatility by staying in cash or dollar-cost averaging into stocks through small but regular investments.
Both scenarios may result in the majority of your idle cash being held in low-interest-bearing savings accounts. If, instead, you put your savings in fixed-deposit accounts, you may earn a better return but you sacrifice some liquidity in taking advantage of investment opportunities without incurring a penalty fee to break the lock-in period.
Tiger Brokers’ cash management solution, Tiger Vault, makes your cash savings work harder to generate a return that is close to fixed deposit rates (i.e. much more attractive than a bank savings account), while still maintaining liquidity to pursue investment opportunities
You can find Tiger Vault on your Tiger Brokers’ app, allowing you to enjoy the best of both worlds. Here are 6 things you need to know about Tiger Vault.
#1 You Can Earn A Return On All Your Funds Earmarked For Investing
As an investor, you may have earmarked some funds for investing, which could just be sitting idle until you deploy them. Ideally, a more efficient way to manage your idle cash is to earn a return on your money even while you wait for the right time to invest.
Instead of dealing with the hassle of constantly switching your funds between different platforms to earn a decent return, you can now do it all on your Tiger Brokers account – using Tiger Vault.
By investing your cash in any of the money market funds offered by Tiger Vault, you earn a better return on your money, while still conveniently managing and monitoring your consolidated funds on the Tiger App.
Tiger Vault also offers an auto-sweep function, so you do not have to worry about whether your funds are earning a return in between trades, after exiting a position or receiving dividend or coupon payments. This is because all idle cash will be “swept” to your chosen money market fund to earn you a higher return.
Otherwise, you can also choose to subscribe to a specific investment amount above $1 or the regular savings plan (RSP) option to invest in any of the money market funds on Tiger Vault.
Read Also: Step-By-Step Guide To Opening An Account With Tiger Brokers (Singapore)
#2 Your Money Is Invested In Liquid Money Market Funds
Your next question would logically be: So, what am I investing in with Tiger Vault?
Tiger Vault has specially curated money market funds within the Tiger Brokers’ app that earn up to 3.4% p.a. (for SGD funds) and up to 5.6% p.a. (for USD funds), based on 7-Day annualised rates. As you can see below, there are various funds that we can invest in to start earning returns on our idle cash.
Source: Tiger Brokers, (taken as of 27 September 2024)
What we can also see (in the screengrab above) is that there are funds listed as T0 and T1. The difference is that funds labelled as T0 can be confirmed on the same day and can be redeemed the next day. When redeemed, our cash will similarly be available on the same day. For T1 funds, units will only be confirmed the following day. Similarly, when we redeem, our cash will be available the next day.
Given that the goal is to earn better returns on your idle cash, you have to remember that there are some inherent elements of risk, even if they are low. The underlying Tiger Vault funds invest in safe high credit rating bond instruments like government bonds making the risk of a negative return on any one day low.
You can also invest in their multicurrency accounts, currently available in Singapore Dollar (SGD) and US Dollar (USD). This means you can continue to hold your funds in the currency of your choice, saving you on foreign exchange conversion fees and spreads. However, note that you can only choose a single money market fund for each of the different currency accounts.
Read Also: Tiger Brokers App: 5 Useful Features To Help First-Time Singapore Investors And Traders Get Started
#3 There Is No Cost To Subscribe Or Redeem Your Funds In Tiger Vault
Unlike the fees that you usually incur when entering or exiting any investment, there are no subscription, redemption, or interest fees for the purchase of the money market funds under Tiger Vault. Moreover, there are no platform-related fees with Tiger Vault that may typically be charged on other platforms as recurring fees. This means you get to enjoy all of the returns that your cash investments generate.
You can easily identify the return on your money by the 7-day yield, which is net of fees on the app account. Moreover, as there is no lock-in period, you can redeem your funds from Tiger Vault anytime you want, without any penalties. All you need to do is to first redeem your funds in Tiger Vault, depending on whether you have invested in a T0 or T1 fund, to return the cash into your account. After that, you can withdraw from your account as usual, giving you the full flexibility of your money.
#4 Your Funds In Tiger Vault Constitute As Your Buying Power
While the speed of withdrawing your cash from Tiger Vault is attractive, it’s not so important if you actually want to invest using the Tiger App when you see an investment opportunity.
Any funds within Tiger Vault continue to contribute to your buying power limit. What this means is that you are still able to buy any stock, options, funds, or even participate in IPOs on Tiger Brokers as though you are holding cash.
Additionally, your buying power limit will increase with the interest earned from Tiger Vault for future investment purchases.
You need to note that you can only use up to 99% of your Tiger Vault balances to pay for your investments. The remaining 1% serves as a buffer for NAV fluctuation and foreign currency rate fluctuation.
Additionally, there may be a chance of margin interest being charged when using Tiger Vault to purchase options due to a difference in settlement dates.
Read Also: 3 Reasons Why You Should Consider Investing In Mutual Funds With Tiger Brokers Fund Mall
#5 How To Deploy Your Idle Cash Into Tiger Vault?
To subscribe to the auto-sweep function on Tiger Vault, simply click on the “Set up” button, which would require you to input your signature (full name). This would ensure your revolving funds with Tiger Brokers will be invested in the chosen money market funds on Tiger Vault. You can choose to pause the auto-sweep function anytime you wish from the Portfolio tab on the Tiger App.
Otherwise, you could invest in Tiger Vault funds as a lump sum by clicking on the “Subscribe” button and inputting the investment amount or choose to invest a regular sum by clicking on the “RSP” button. These are the yellow buttons at the bottom of the screenshots below.
Source: Tiger App (taken as of 27 September 2024)
#6 What Happens If You Want To Use Your “Idle Cash” In Tiger Vault To Invest In Stocks (Or Other Opportunities)
Once you have either activated the auto-sweep function or have subscribed to a particular fund on Tiger Vault, your buying power will be maintained (up to 99%), so you can trade as usual.
Your buying power can be seen under the box for inputting the quantity of stocks that you want to buy with cash and on margin (given the amount of cash and stocks you have).
Source: Tiger App (taken as of 27 September 2022)
The Tiger Vault feature is an additional layer of investment that earns you more returns without restricting your trading or investment decisions on other instruments with Tiger Brokers.
Earn An Attractive Interest Return When You Grow Your Idle Cash In Tiger Vault
All Tiger Brokers investors who subscribe to Tiger Vault can enjoy earning daily returns on your idle cash – on top of continuing to retain liquidity to invest when the right opportunities present themselves.
Sign Up for a Tiger Brokers account to start using Tiger Vault today! If you do not already have a Tiger Brokers account, you can also stand to enjoy up to $1,260 in welcome perks, including an upsized 6.8% p.a. returns with Tiger Vault (capped at SGD $100,000) and up to USD100 stock voucher!
Disclaimer:
This advertisement has not been reviewed by the Monetary Authority of Singapore.
Any views shared with Prospective Clients (“Prospects”) are suggestive in nature and on a sample basis only. This may also be predicated on assumptions that are made by Tiger Brokers (Singapore) Pte Ltd about the Prospects’ investment objectives and risk profile. Our suggestive and sample views extended to Prospects are not to be considered as recommendations made by the Company. Suggestions provided are also based on information that may be shared by the Prospects, the accuracy and comprehensiveness of which Tiger Brokers is not in a position to verify.
Tiger Brokers (Singapore) Pte Ltd (herein “Tiger Brokers”) may, to the extent permitted by law, participate or invest in other transactions with the issuer of the products referred to herein, perform services or solicit business from such issuers, and/or have a position or effect transactions in the securities or options thereof. The information herein is for recipient’s information only and not an offer to sell or a solicitation to buy. Any date or price information is indicative only and may be changed without prior notice. All opinions expressed and facts referred to herein are subject to change without notice. The information herein was obtained and derived from sources that we believe are reliable, but while reasonable care has been taken to ensure that stated facts are accurate and opinions are fair and reasonable, Tiger Brokers does not represent that it is accurate or complete and it should not be relied upon as such. The information expressed herein is current and does not constitute an offer, recommendation or solicitation, nor does it constitute any prediction of likely future stock performance. Investment involves risk. The price of investment instruments can and do fluctuate, and any individual instrument may experience upward or downward movements, and under certain circumstances may even become valueless. Past performance is not a guarantee of future results. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any person or affiliated companies. Before making an investment decision, you should speak to a financial adviser to consider whether this information is appropriate to your needs, objectives and circumstances. Tiger Brokers assumes no fiduciary responsibility or liability for any consequences financial or otherwise arising from trading in securities if opinions and information in this document may be relied upon.
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