Can Singapore Savings Bonds Beat Fixed Deposits for Savings?

Personal Finance

Can Singapore Savings Bonds Beat Fixed Deposits for Savings?

If you find yourself needing security and flexibility in your savings, then the new Singapore Savings Bonds might be your answer.

Published on 24 July 2015

Since the Great Financial Crisis of late 2008, the majority if not all investors have been witnessing decreasing returns on their money held in cash accounts. It is also difficult to obtain a rate over 0.5% for your cash holdings. Enter Singapore Savings Bonds:

What are Singapore savings bonds (SSB)?

Can Singapore Savings Bonds Beat Fixed Deposits for Savings? MBS Marina Bay Sands Singapore CLV Ce la vi WEALTH

They are a new type of government bond launching on 1st September 2015. One of the key features of the investment is that bondholders can get their money back in any month, with no penalty imposed. This means investors don’t have to decide on the term of the investment upfront, which might be appealing to some.

What about returns?

Can Singapore Savings Bonds Beat Fixed Deposits for Savings? Laptop Working Hand sketching notes WEALTH

Interest on the bonds will be linked to long-term Singapore Government Securities (SGS). Whilst SGS pay the same interest every year, SSBs will pay coupons which step up over time. If you hold your SSB for the full 10 year term, the average interest each year will match the return if you had invested in a 10 year SGS bond. Although there are no guarantees, the average return from a 10 year SGS bond has been between 2 – 3% per annum over the last 10 years.

Are there risks?

Can Singapore Savings Bonds Beat Fixed Deposits for Savings? Laptop Working Hand sketching notes pen WEALTH

As with any investment there are risks associated and before investing you should take full advice from a qualified individual to run through the benefits and drawbacks before deciding whether it’s a suitable investment for your circumstances and risk profile.

What are the alternatives?

Can Singapore Savings Bonds Beat Fixed Deposits for Savings? Laptop Working Hand sketching notes watch timepiece WEALTH

If you feel, after having a conversation with a qualified wealth manager that SSBs do not match your requirements, you can currently achieve returns of approximately 1.5% on fixed rate bonds with some of the local banks. But again, speak to a qualified individual to learn more about these investments and the benefits and drawbacks of each one.

With the daily cost of living continuing to increase then investing your cash becomes an important way to ensure your money is keeping up with the general rise in prices but before investing ensure you fully understand the features of any plan recommended to ensure it meets your aims, objectives and circumstances.

SIGN UP