The distinction between saving with my bank and saving with my broker

Saving money is an integral part of financial planning and ensuring long-term security. Singapore has two primary savings forms: in a bank account or with a broker. Although these options offer similar benefits, some key differences differentiate them. This article will explore the distinctions between saving with a bank and saving with a broker in Singapore.

Interest rates

The interest rate offered on savings accounts at banks tends to be lower than those offered by brokers due to their lack of risk tolerance and conservative investment strategies. Brokers may provide higher rates depending on the type of account opened and the amount invested. However, it is essential to note that rates can fluctuate depending on market conditions. Moreover, banks typically limit how much money can be deposited and withdrawn and when investors can make withdrawals or deposits.

Types of investments

Banks generally offer their customers a more limited selection of investment options, such as certificates of deposit and savings accounts. On the other hand, brokers typically provide access to a broader range of assets like stocks, bonds, mutual funds and real estate investments. It allows investors to diversify their portfolios and take advantage of different markets. Furthermore, brokers can advise on the most suitable investments based on an individual’s financial goals.


Regarding transparency concerning fees, banks tend to be less forthcoming than brokers. Banks may have hidden fees or commissions that are not always made evident at first glance, while brokers usually set out their fee structure upfront so customers know what they are paying for. Brokers may also provide detailed information about the performance of investments and provide regular updates to customers.


The taxation rules for savings in Singapore are slightly different depending on whether they are held with a bank or broker. Savings with banks may be subject to higher taxes, while investments made through a broker can benefit from tax-advantaged accounts that help reduce investors’ tax liabilities. Furthermore, investments held with brokers will usually be exempt from stamp duty, whereas this is not the case for deposits made into bank accounts.


When choosing between saving with a bank or broker, it is crucial to consider accessibility. Banks allow customers to access their funds quickly, but brokers typically require more paperwork and a waiting period before funds become available. Furthermore, brokers may require customers to have a certain amount of money in their account before they can begin trading. Additionally, some banks may offer online banking services, allowing customers to manage their accounts remotely.

Risks of opening a regular savings plan

While there are several advantages to opening a regular savings plan, investors should know about the risks. Knowing the risks will help investors make an informed decision and avoid unexpected losses.


Inflation is a risk that comes with any savings plan. If the inflation rate increases, the money saved will buy fewer goods and services as time passes. To combat this threat, investors must invest in accounts with higher interest rates than the rate of inflation.

Interest rate risk

The interest rate associated with a savings plan can change over time. If the rate drops, investors could lose money if they cannot find higher-yielding investments elsewhere. To mitigate this risk, investors must research different savings plans and compare the interest rates before opening an account.

Liquidity risk

With regular savings plans, investors may need to incur penalties or fees to be able to withdraw the money. Therefore, it is crucial to understand any account’s terms and conditions before investing to avoid this type of risk.

Counterparty risk

The counterparty risk is associated with the financial institution that provides the savings plan. If this institution fails, investors may lose their money if they cannot recover it from a third party. It is, therefore, essential to consider the creditworthiness of any bank or broker before opening an account.

Exchange rate risk

Exchange rate risk is a potential concern for investors who save in foreign currencies. If the currency of the savings account depreciates relative to the investor’s home currency, then the value of the investments can be affected. To reduce this risk, investors should consider investing in accounts denominated in their home currency.

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