Savings account rates are down. Here’s how to rethink your cash strategy for 2026

Interest rates continue to dwindle across the board, and it doesn’t look like this will change much through the first half of 2026. This means lower returns on your cash are to be expected. Here’s the evidence – the latest fixed deposit rates offered by banks in Singapore range from 0.8% to 1.8% p.a.. Bonds aren’t doing so hot either, with the latest tranche of Singapore Savings Bonds for Jan 2026 offering average returns of 1.99% p.a. – and that’s only if you hold it for the entire 10 years.

The culprit? Softening fiscal policy on the part of the U.S. Federal Reserve. Pressured by ongoing stubborn inflation and lingering labour uncertainties, the Fed embarked on its third consecutive rate cut on December 10, lowering interest rates by 25 basis points to between 3.5% to 3.75%. While the outlook for 2026 is lightening, the Fed expects at least one more cut on the cards – further damping returns.

This development hasn’t gone unnoticed, with Redditors debating about what to do with their excess SGD. This discussion, of course, ties into the greater conversation of how to manage your cash, whether to build your emergency fund, optimise your savings account, or save for a big-ticket purchase down the road.

If you’re also wondering what to do in the face of dropping interest rates, here’s how you can rethink your cash strategy

The 3-bucket model: Core, store and more

Walter de Oude, Chocolate Finance founder, believes: "I think that everybody has got three buckets of money – think of it like, “Core, store, more”.

He explains that your “core” bucket is where you should pay the most attention, striking the right balance between consistent returns and ease of access. “It should go where you can get the best possible returns, and where you can get it anytime.”

Meanwhile the “store” bucket is for funds set aside for greater returns over a longer term. As for “more”, this is where you boost your overall portfolio with more volatile plays.

Let’s take a closer look at how to utilise this 3-bucket cash strategy.

“Core” bucket cash strategy tips

Diversify into other currencies for higher returns on your everyday core cash bucket

Your “core” bucket is your main focus. It’s where you manage your everyday cash for higher returns. One way you can do so is by diversifying into other currencies.

While the returns rate in Singapore is staying under 2% p.a., this isn’t necessarily the case elsewhere. For example, despite the latest rate cuts, U.S. Treasury yields are hovering between 3.52% p.a. for 12-month bonds, and 4.17% p.a. for 10-year bonds. This means there’s the potential to get higher returns by diversifying into the US Dollar.

And with Chocolate’s dual-currency capability, you can do just that. Seamlessly convert your SGD balance to USD, or add USD directly and start earning higher returns than the SGD account – all it takes is just a few taps on the Chocolate app.

Pro-tip: Chocolate often offers a 48 hr FX fee free window too - look out for the next one to take advantage of fee free conversion!

How this can help you

Here’re the latest returns offered on both your SGD and USD balances in Chocolate.

Simply by converting your SGD to USD, you can double your returns on your everyday cash in your “core” bucket.

This is further bolstered by the Chocolate Top-up Programme, which tops-ups your returns to the rates stated above, so you don’t have to worry about market volatility dragging down your returns.

Note that the Top-up Programme is available during the Qualifying Period, which from now until 30th June 2026, or until the assets under management for the Chocolate Managed Account reach S$1.5 billion – whichever comes first. Chocolate may, at its discretion, choose to extend or remove the Top-Up Programme.

Keep your “core” bucket transparent and liquid

The point of managing your core cash bucket is so you can stay ready – whether to capitalise on opportunities on short notice, or to act upon your goals when the time comes. This means you’ll want a solution that keeps things transparent, while allowing you to stay liquid.

How this can help you

Transparency keeps you informed on what’s going on with your cash at all times, so you know exactly what the deal is. Meanwhile, staying liquid ensures you can act with speed at critical junctures.

Chocolate is designed to offer both transparency and speed, catering to your digital-based lifestyle.

Funds in Chocolate earn daily returns that you can check on the app at any time. These are added to your balance everyday; making for progress that you can see in real time.

Also, you can top up your balance instantly via PayNow or even set up a direct recurring payment from your bank – allowing you to start earning returns faster. Withdrawals can be made at any time, with no lock-ins, no withdrawal fees, and no fuss.

The bottom line? With daily returns, instant top ups and withdrawal with no lock-ins, you retain complete control over your core cash strategy – as it should.

“Store” bucket”: Explore money market funds for greater returns in exchange for slightly higher risk

While returns are retreating on the whole – especially in Singapore Savings Bonds, fixed deposits and bank savings accounts – some holdouts still offer hope for money you can lock away for a little longer.

"The second bucket of money, is your longer-term bucket, your “Store” bucket, Walter points out. “This bucket is where you want to earn some more returns, but don't really want to manage it every day, like CPF or your insurance,”

“You don't mind what your “Store” bucket is invested in; you just want to have better returns. You don't mind if it goes up and down a bit because you don't need the funds now. You need it later,” he explains.

Money market funds (MMFs) have been (and still are) providing returns that are on the higher end among alternative SGD rates of returns. In exchange, these instruments come with slightly higher risk - perfect for your second bucket of money “Store”.

MMFs’ greater returns come from high-quality, short-term debt instruments such as government bills and bonds, bank deposits and short-duration corporate bonds. While considered low risk, do be aware that MMFs come with short-term market volatility; but this can be smoothed out with a longer time horizon.

How this can help you

Keeping returns as high as you can is essential in capital preservation – a core tenet in a sound cash strategy. Placing a portion of your funds into MMFs allows you to shore up your cash holdings for longer even as returns collapse.

But it’s important to pick the right MMF that’s aligned with your goal.

“More” bucket: Your booster pack

“More” is your third bucket of money, notes Walter. “This is the ‘play’ or ‘moonshot’ money, which you can use for higher risk investments, and perhaps even for trading. Think speculative assets like Bitcoin, or hot tech stocks like Tesla, Nvidia and Apple. Gold has also been on a bull run lately,” he adds.

To be clear, the “More” bucket is meant to act like a booster pack, meant to capture market upswings without over-risking your cash portfolio. It is advisable to keep this bucket small, no more than 10% of your overall cash holdings.

“This bucket can only be considered if you have solid plans in place for your core and store monies,” cautions Walter, emphasising the importance of keeping your cash strategy grounded.

Evolve your core cash strategy with Chocolate

The 2026 outlook ahead may be marked by declining returns and falling interest rates, but that doesn't mean we should just sit there and watch as returns dry up. By making smart decisions now, savvy savers can still tap on higher returns to help power their goals, while maintaining the ability to pivot when opportunities emerge.

As we’re seeing right now, markets change, and the best cash strategy is one that’s capable of evolving with it. Get ahead of lower returns by taking your cash strategy to the next level – make good plans and consider the 3 bucket approach - “core, store, more”.

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Disclaimer:

Chocolate Finance is a brand of Chocfin Pte Ltd and is regulated by the Monetary Authority of Singapore. The views and opinions expressed on this post are solely those of the original authors and contributors as of the date of this post and are subject to change based on market and other conditions. This is for information only and does not constitute an offer or solicitation to buy or sell any of the investments mentioned. Neither Chocfin Pte. Ltd. (“Chocfin”) nor any officer or employee of Chocfin accepts any liability whatsoever for any loss arising from any use of this blog or its contents.

Please note that Chocfin does not guarantee the accuracy, relevance, timeliness, or completeness of the information provided on this post. The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them. Chocolate’s returns are currently supported by a promotional 'Top-Up Programme', valid during the Qualifying Period and subject to terms and conditions. Past performance is not indicative of future results. All investments involve risk, including the risk of losing all of the invested amount and may not be suitable for everyone. This advertisement has not been reviewed by the Monetary Authority of Singapore.