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Why Putting All Your Money In a Bank Is Bad

You should always have some savings in your bank just in case you need them for emergencies. However, putting ALL your money in a savings account is a really bad idea. In this infographics, we explore why that is the case with a few simple examples! Read on to find out why!


It is not immediately clear to many but the purchasing power of any money placed within your savings account is almost always shrinking year on year. This is because bank interest averages between 0.2% and 0.3% (fixed deposits with a lock in period). This pales in comparison to an average yearly inflation rate of 1.38% over the last 5 years between 2011 and 2016.

How does that impact you?

Suppose you have S$800,000 in your savings account today. You would be able to afford a house that cost the same S$800,000. All is well and good.

However, in five years time, the money sitting in your savings account would only grow to approximately S$812,072 (assume 0.3% interest in fixed deposits annually) while the house would have appreciated to a whopping $856,744 due to inflation (assume 1.38% annual inflation rate)!

You just went from being able to afford a house to not being able to afford the same house in five short years! In other words, putting the entire S$800,000 in your savings account / fixed deposits account has made you poorer, S$44,000 poorer in purchasing power.

But that’s not all. Putting all your money in a savings account also meant giving up the opportunity to have a way better life.

A way better life?

Let’s toss out S$800,000 and look at a more manageable sum of say S$100,000. IF you are to take out S$100,000 from your savings account and invest it.

Just earning 5% net investment returns per year (which is very attainable by just doing stock indexing or using many of the available robo-advisors in Singapore, autowealth.sg for example) would give you an additional yearly income of S$5,000! Depending on the size of your family, this additonal income translate to 2 – 3 fully paid vacations per year!

And that’s not all. Suppose you decide not to indulge yourself in yearly family vacations and plan further ahead. Reinvesting every year at 5% annual net investment returns would more than quadruple your S$100,000 to $400,000+ in 30 years! That additional S$300,000 in retirement funds means you can travel the world instead of sulking at home after your retirement!

Getting decent net investment returns at a manageable risk is not difficult at all. So ditch savings / fixed deposits account today and start investing!

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