Where to park my cash?

This is another common question, especially among those who are just starting their career or are crossing major life milestones. In the past, the answer is probably simple: under your pillow, in a money jar, buy gold, put in a bank account.

However, recently, there is an explosion of a multitude of options across multiple banks and fin-tech or even insurance companies, offering a wide range of products that seemingly look like a "savings account" that offers high interest rate (well, higher than a typical bank savings account at least). There are even spreadsheet circulating online with rates comparison, etc. Unfortunately, what it does not do is help you figure out what you are parking the cash for and hence what products are suitable for you. It assumes you already know what you are doing! So in this article, let’s look at the fundamentals.

P.S. You may see this as a follow up of my previous article — do read it as well!

First, what is cash?

Or rather, what do we use cash for? It’s intermediate or temporary store of value to be exchanged for goods and services. Buying food? You need cash. Clothes? Use cash. Visiting a doctor? You need cash too. Buying house? Cash.

I get it, the "cash" nowadays might be in a digital e-wallet or bank account — you do not necessarily need to use bank notes to pay for goods and services. It can even in the form of credit, i.e. use credit card to pay first. But when you do pay the credit card bill, you need cash.

So that’s cash — it’s liquid and you can use it to pay for immediate transaction and payments. (Not to be confused with money).

Different needs for cash

If you notice in the examples above, buying food and buying a house are in completely different categories of transactions, even though we need cash (or at least some cash) for both. So we need to know what kind of transactions we need the cash for. In general, we can break it down in terms of when we need it:

1. Now, immediate. This cash amount will be for immediate daily transaction such as buying food, etc.
2. Monthly / annual schedule. This relates to regular transactions like bills and subscriptions, etc.
3. Future, planned. Different from the above two needs, this cash is for planned transactions in the future; think: holidays, house, wedding, etc. We can even extend this to retirement — which is a time in the future when you need cash for regular expenses but you are no longer drawing a regular income.
4. Future, unplanned. This is what people call "emergency savings". It’s cash reserved for unplanned expenses that require immediate transaction. It can be as small as say seeing the doctor, home fixes, car breakdown, etc. Or as big as getting laid off your job or hospitalised, etc. The general rule of thumb for how much you need is at least 6 months of your monthly expenses.

Savings account vs Money market fund

Before answering the initial question, let’s look at these two products. I specifically chose these only because they are relevant to our discussion, and that one is often marketed and masqueraded as the other. There are also other products which are in fact endowment insurance policies. However, this is typically rather clearly marked out especially if it is marketed or issued by an insurance company.

Savings account

In Singapore’s context, a savings account is essentially a cash account that typically pays interest. The interest rate varies across banks and currency, but usually it is very low for SGD. As of June 2025, it is around 0.05%.

There are some banks that offer higher interests for these savings account with some conditions, e.g. with a max amount, min transaction, tiered interest, types of transactions, etc. As of June 2025, the interest rate is typically in the range of 1.5% to 3%, with limits in the range of $10k to $150k, each with their own conditions.

Most importantly, these accounts are holding cash, which can be used for immediate transactions. There is also some form of guarantee / insurance by SDIC, up to a certain amount, if that matters to you.

Money market fund

This is typically a mutual fund / unit trust that invests in short-term debt, such as T-bills, or sometimes fixed deposits. Essentially, they provide high liquidity, capital preservation (although not guaranteed!) and yield (interest) that is higher than a typical savings account.

Here is the thing: even though these funds are highly liquid, the liquidity is typically daily and not immediate. When you redeem (or cash out) these funds, it will take a few days before you can actually use it for transactions. Hence, your funds cannot be used for immediate transactions like cash. These funds are not cash, even though they are features which make it look like cash — e.g. high liquidity, capital preservation.

When we look at the products offered by banks, and more so by new and shiny fin-techs, we need to pay a close attention to what the underlying financial instrument is. If it is a money market fund, then it is not the same as a savings account, no matter what the marketing materials might imply; these are in fact investment products.

So, where do I park my cash?

Finally, we can answer our original question. And the answer starts with: it depends on which cash and do you need it?

• For daily transaction cash, it definitely has to be in a savings account that allows you to freely make payments. If it offers a higher or bonus interest, then that’s great.
• For monthly transactions, maybe having it in a savings account is also easier, especially if these bills are incurred by daily transactions, e.g. by charging daily payments to credit card.
• For annual transactions, perhaps it is fine to park it in a money-market fund to get a higher yield, and cash it out when you need it.
• For emergency funds, it can be part cash, part money-market funds, or even fully money-market funds if you have credit to buffer for the time required to cash out the funds when you need it.
• For longer-term needs, you may consider investing the funds. To get some ideas for this, refer to other my other articles. But while waiting for good opportunities or even while deciding what kind of investment is suitable for you, parking your excess cash (i.e. above your immediate needs) in a money-market fund to let it get some interest is not too bad.

You get the idea. Basically match where to park the cash with when they are needed. This is the core of cashflow management.

Then, when considering which savings account to use, since typically they have some conditions and hurdles before you can get a higher interest rate, choose one where you can easily get some (if not all) of the bonus interest. This means one where the criteria already fits your spending patterns and lifestyle. Then getting the bonus interest is "automatic" for you.

If chasing the next 1% interest requires extra spending beyond your means or on something you don’t need, then it defeats the purpose of a savings account.

Summary

Stick to something you understand (if it's too good to be true, it probably is!) and is achievable for your current needs without too much additional effort. Keep it simple, keep it easy, and keep it sustainable.

In fact, where to park your cash is part of a larger cashflow and personal finance management. Look out for future articles!

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