As a practitioner of Value Investing in Singapore, writing about the Singapore Savings Bonds (SSB) seems unlikely. However, in Are You Prepared for Stock Market Crash, I did mention about setting aside some cash to leverage on possible buying opportunities at great value, and I thought you may want at least some yield on the cash you are holding in the meantime.
The Singapore Savings Bonds are fully backed by the Singapore Government. There is a great deal of flexibility and you can invest up to 10 years, with interest that increases over time.
The flexibility is that you can keep the investment for the whole 10 years or choose to exit any time with the capital protected but receive a lower interest return.
The other great thing about SSB is that you can start with just $500.
At each issuance of the bonds, the interest rates are determined and locked in for the entire 10 years. A new savings bond is issued every month.
The Interest rates table below illustrates the interest pay-out depending on how long you keep the investment.
There is a whole website on the full details of Singapore Savings Bonds, so I will refer you there for further information.
How about fixed deposits offered by the banks? Well, you can search around for promotional rates but I guess for a tenor of 1 year, you can probably get just over 1% per annum. You will then have a “lock-in period” of 1 year. Comparatively, SSB gives you about 1% even if you redeem within less than a year.
A word of caution is that there is a redemption process and you don’t get your cash like immediately after you submit your redemption request.
I won’t normally recommend an “investment” into an instrument like the SSB as you should strive for higher yields because in the longer term, the actual investment return plays a crucial part towards wealth accumulation and goal of financial freedom, reference to article Compound Interest and Einstein.
A quick video summary here:
As always, we do welcome comments below for exchange of ideas and information.