5 Benefits of Putting Your Idle Funds into a Cash Management Solution

Tiger Brokers - Tiger Vault cash management solution

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A pile of cash is a very nice thing to have. But putting your idle cash in a piggy bank, stashing it under your bed or even just leaving it in a bank account are not smart moves.

If you leave your idle cash in the bank, you’re actually causing its value to be eroded by inflation over time. Most savings accounts offer a base interest rate that’s rather low; and even those high interest savings accounts require you to jump through many hoops in order to achieve a decent bonus interest.

You could park your spare cash in a fixed deposit in a bid to get a higher interest rate, but that means your money will be locked in for a fixed duration.

You might be thinking of using your idle cash to buy stocks, but the market is so volatile right now that even if you pay $0 commission, that might not be a sound choice, especially if there’s a chance you’ll need to use the cash soon (might need to hold to break even or profit).

Alternatively, you might decide to keep the cash liquid and use it as part of your emergency fund, but that just takes you back to square one, with the same old problem of inflation eroding its value.

So how to grow that cash, ideally in a way that gives you stable returns yet offers liquidity? Read on to find out about one possible solution.


What are cash management solutions?

One way to grow your idle cash is to put it into a cash management solution.

Cash management solutions (such as cash management accounts) let you earn a higher interest rate on your cash in exchange for taking on an amount of investment risk, typically kept low. You still retain your cash’s liquidity and can usually withdraw it at any time.

One example of a cash management solution is the newly-revamped Tiger Vault by Tiger Brokers.

When you park your money in Tiger Vault, you get to benefit from relatively consistent returns, while still retaining the possibility to withdraw your cash or transfer more money to your account. There’s a low minimum transfer-in amount, so you can start growing even small amounts of cash.

Tiger Vault is an update of Tiger Broker’s previous cash management solution, Cash Plus, which invested users’ money in just one fund. The new Tiger Vault now lets you choose from eight funds, depending on your investment goals. It’s also multi-currency, and enables you to use cash in your vault to invest in other products.

So, why should you consider putting your money in a cash management solution like Tiger Vault? Here are three benefits for consideration.


1. More stable returns, lower risk

Markets are very volatile right now. If you’re an investor with a lower risk appetite who doesn’t appreciate getting a daily heart attack, you should be looking for a safe way to grow your cash, while still receiving the highest possible yield.

We are currently in a rising interest rate environment. This is thus a great time to put your cash in Tiger Vault, since the funds that Tiger Brokers chose for Tiger Vault enjoy increasing yields every day.

In fact, Tiger Vault’s estimated yield-to-maturity for Q3 2022 is a maximum yield* of 2.4%, which reflects rising interest rate expectations. That’s relatively more superior than  what you can realistically get from most savings accounts.

Tiger Brokers - Tiger Vault cash management solution
Image: Tiger Brokers Singapore

*Yields are estimated based on the current market environment and may be higher or lower. The Yield projection is based on current market conditions as of July 2022. Check out the Tiger Vault page, on the Tiger Brokers app, to see the latest fund performance.


2. Auto-sweep feature

Did you know that Tiger Vault has an auto-sweep feature? This means that users are able to sweep their cash balance into their Tiger Vault, which maximises their idle money at any point of time!

This is honestly great for busy/lazy folks like me, who may not monitor our investment portfolios often (or forget they even exist). A 2.4% gain on my spare $10,000 might not sound like much on paper, but it’s $240 a year, which can buy me an omakase meal at a Japanese restaurant!


3. No lock-in

Just reiterating that unlike fixed deposits or other investment instruments, the money in Tiger Vault can be redeemed anytime as there’s no lock-in. This makes for great liquidity, which is what we all appreciate in these times of high inflation and high cost of living.

This brings us to the next point…


4. Able to liquidate your portfolio fast

Unlike fixed deposits, cash management solutions like Tiger Vault allow you the option to  liquidate your portfolio relatively quickly. If you decide you need cash, you can instantly transfer money out of your account to spend.

That means you can swiftly access your funds for emergencies. You can also use your funds on short notice to quickly react to favourable market conditions within a day in one single click. For example, if a stock on your watchlist experiences a short, temporary dip, you can swoop in and pick it up at a bargain with your cash in Tiger Vault.

You can also quickly and easily convert your funds to assets. In a single click, you can convert a specified amount in Tiger Vault to the stock (or any other financial product) you want to buy. That’s so much more convenient than having to withdraw cash first, transfer it to your brokerage account and then buy the stock.

For the record, Tiger Vault users can instantly buy options, stocks, ETFs and funds and participate in IPOs using their Tiger Vault funds. So it allows you to invest quickly with your idle cash.


5. Multicurrency feature

Tiger Vault is the first multi-currency cash solution in Singapore, and is available in SGD, USD and HKD (coming soon). You can choose from different funds to grow your cash with, including options in all three currencies.

As you know, having a multi-currency cash solution saves you cash as you don’t have to lose money through foreign exchange conversions each time you want to park your idle money in a different currency.

To make sure you don’t miss out on opportunities on Singapore, Hong Kong or US markets, you can use your funds in Tiger Vault to buy securities in the corresponding markets. So, you can use your USD to buy stocks on the New York Stock Exchange (NYSE) without incurring any currency conversion fees.

If you do not have sufficient funds in one currency, you can use cash in Tiger Vault in another currency. So, if you don’t have enough USD but want to buy stocks on the NYSE, you can simply use the SGD in your vault for the purchase.

You will only need to convert cash to the currency used for the purchase if your trade closes in a negative position at the end of the day. In that case, currency in your vault will be automatically converted to repay the negative balance. So, if your NYSE stock transaction closes in the negative at the end of the day, SGD in your vault will be converted [better to mention what the conversion rate is]to pay for the amount that has fallen below your initial position.

So, Tiger Vault not only lets you grow your idle cash in multiple currencies, but also makes it easy to access market opportunities as you can quickly buy financial products in multiple currencies using the cash in your Vault.


Get 9.9% cashback with Tiger Vault

Tiger Vault gives you stable returns on your idle cash at a lower risk. Liquidate your portfolio whenever you need to, and take advantage of the multicurrency feature to grow your cash in SGD, USD and HKD (coming soon).

For a limited time only (from 9 Sept 2022), receive 9.9% cashback on a one-time investment for 9 days when you use Tiger Vault’s 9.9 coupon.

Sign up for a Tiger Brokers account to start using Tiger Vault.

Don’t see Tiger Vault on your Tiger Trade App? Remember to update your App to the latest version!



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