MMF rtn vs Bank deposit rates

MMF means Money Market Fund.

This is not something new and have been propagated several times over. A $1000 savings in bank deposit rates have yielded 0.25% ($2.50) in interest for whole of 2007 (See table 1 below). The same $1000 savings, if invested in Money Market Fund (example: Phillip Money Market Fund) , would have returned about 2.26% ($22.60) for whole of 2007. What's more, there's no account opening fees, no min monthly amount to maintain and no upfront sales charge for the invested amount, but on the flipside, there's no ATM for the Money Market Fund. Withdrawal can only be done online.

Key difference between MMF & Bank deposit: Money made from bank deposit is called "interest" while money made from MMF is called "capital gain".

Planning for SRS YA2008 can go hand-in-hand with MMF.
See http://www.waynekoh.com/2008/01/pace-your-srs.html

Table 1
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Interest Rates of Banks and Finance Companies (Monthly)
Jan 2007 to Jan 2008

Period Bank Fixed Deposits 3 Months Bank Fixed Deposits 6 Months Bank Fixed Deposits 12 Months Banks Saving Deposits Finance Companies Savings Deposits 2007 Jan 0.57 0.67 0.87 0.25 0.33 Feb 0.57 0.67 0.87 0.25 0.33 Mar 0.56 0.67 0.87 0.25 0.33 Apr 0.53 0.64 0.85 0.25 0.33 May 0.52 0.62 0.83 0.25 0.33 Jun 0.51 0.62 0.83 0.25 0.33 Jul 0.51 0.62 0.84 0.25 0.33 Aug 0.52 0.63 0.84 0.25 0.33 Sep 0.53 0.64 0.85 0.25 0.33 Oct 0.51 0.62 0.84 0.25 0.33 Nov 0.51 0.62 0.83 0.25 0.33 Dec 0.51 0.62 0.83 0.25 --

Source: www.mas.gov.sg financial databases