Saving and invest for future

Is Singapore’s Savings Bond a Good Investment?

#1 What is Singaporean Savings Bonds?

SSB, or known as the Singapore Savings Bonds were first introduced by the Government in the year 2015. The Singapore Government launched this bond to aid its people in a secure long-term saving engine. During its early years, it was only known as quite a conservative financing venture. Now, with some newly developed policies and alterations, it has become a better investment means with up to the mark returns.

#2 Get to Know About SSB

Simply put, bonds are a cycle of giving your money to be kept safe to a party that created the ‘bond.’ That is what SSB is. This party, the issuer of the band, may vary, such as private corporations and governments.

Why should you trust other entities to keep your money safe, you ask? This is because this transaction allows for a return. Meaning to say, the more you safe and let the bond issuer keep your money with them, the more rates of returns you are going to get. Also, the main benefit of lending your cash to the government is that; you face zero risk – because ideally, the government should be the most trustworthy keeper.

However, with almost no severe nor immediate risks, ‘investing’ through a bond, which in this case is SSB will not get you a great amount of a lump sum cash. It is like having a savings account, just not with a bank.

With that said, SSB is still one of the most common options when it comes to Singaporeans investing their money because it has a greater return rate in comparison to fixed deposits with a bank. Not only that, but it is also easier to battle up against the 1.9% inflation, especially for those investors out there who are just starting out or those who want to stray away from any kind of risk as much as possible.Investment return

#3 Current SSB Investment Yield

As mentioned, buying SSB units is not like investing in the stock market. It is rather a slow but steady transaction in order to get a little more thank your bucks. That is why it comes with almost no risk at all.

In any case, you are looking out to balance your portfolio with investment plans with much higher risks, this could also be the answer you are looking for.

Nevertheless, it is crucial that you are informed that SSB returns are not as high as they used to be. Back in the old days, their interest percentages would often go beyond the 2% p.a. ceiling value. Frequently, 2.2% is very much possible, or even more. Hence, returns were in favorable merit back then, even for shorter tenures of only a few years. Not to mention, those who were in the longer tenures, pushing it to the full 10 years, it could even reach 3%.

On another page, the very current SSB interest rate is at a satisfactory level as the highest it struck was only up to 1.76% average of returns per annum over the span of 10 years. In addition, other zero-risk investment vehicle alternatives, such as own savings accounts and fixed deposits – their interest rates are still looking fine. Some banks have stepped up the interest rates for savings accounts. Whilst for fixed deposits, one can find a 2% p.a. returns on cruise control.

#4 SSB Returns

Presented by Seedly Reads, up until Mar. 2, 2020, the average p.a. return value is 1.63%. While this may seem low for some people, bear in mind that it has increased by 0.17% from 1.46% only, ten years ago.

For an instant, say that you are up to invest $1000 in SSB and kept it in the account for the 10 years we counted – the interest rate that will be added to your investment is the current rate on effect, which is 1.63%, making it to a total of $163 of what you are getting.

With that said, Singaporean Savings Bond is a good choice to partake if you would like to have a low-risk investment plan. In our opinion, buying SSB would be a good option if, in your current savings, you have $10,000 or less. Or, this could be a feasible recourse for someone who just wants to stash their savings in a place for a few years.

Risk with trending down arrow

#5 Get Informed Before You Buy

After knowing the recent circumstances of SSB, if you are still interested, you may now be asking where and how you can start buying. Nonetheless, before you provide a step-by-step guide to that, let us first get informed on the possible risk (are there any?) as well as the benefits.

  1. There will be no penalty exerted for early redemption

Earlier on, we have highlighted that with SSB, the longer the time you let your money untouched, the higher the amount of interest rate you will get. Even so, there will be no sort of penalty for those who wish to end their tenure earlier than subscribing.

After you have submitted your redemption request, you are going to get your principal back together with accrued interest (if any). You are getting it by the 2nd business day of the next month.

As an example, if you would like to redeem $5000 of your pennies in April of 2020, you are to get it in May 2020 along with accrued interest, at the end of 2nd business day. With that said, if you are an individual who likes to have the freedom of your expenditure, SSB is a great option.

  1. The Singaporean Government got your back

To simply, your money is in safe hands, if not the safest. This is because SSB is an AAA-credited bond. With high credit of worthiness, it imposes lower risk, even if you stand on differing political views as the governing identity.

It is indeed one of the safest investment plans in the current market.

How much do you need to start Singapore's Savings Bond?

  1. You Only Need $500 to Start

Like other stock market trading, SSB does not require you to have in hand loads of cash to start saving. You are able to buy units of SSB with only $500 minimum.

This makes it appropriate for a lot of people with varied savings and resources, if not all. SSB’s current Individual Limit is at $200,000 including bonds you bought with your own cash or SRS.

  1. Eligibility to apply

If you are an individual aged 18 and above, you are eligible to apply for SSB. You can have an early start with SSB first if you wish to have savings to be untouched in the next few years.

  1. Payment of Interest

You will be getting your interest every 6 months. Since the interest is paid out, compound interest is not applicable in this case. Meaning to say, you will not be earning the interest of your actual interest rate.

  1. Bond ownership

You are to be the sole owner of the bond you bought. SSB are not to be sold like a share.

  1. Other reminders…

      1. Keep in mind that if you wish to use OCBC, the OCBC mobile application works.
      2. Have your CDP account number ready when you are going to apply.
      3. Investment higher than the minimum amount, you may add another $500 and so on.
      4. Each application limited at $50,000.
      5. You are to be charged a $2 transaction fee for every application.
      6. SSB are exempted from any tax payment.

Where to start and what do you need?

#6 Where Do You Start? What Do You Do?

Finally, this is how you go about buying your bonds through SSB. We provide here for you step-by-step.

Step 1: Have a local bank account

If you have yet to open up, do so. Most Singaporeans may already own an account of either DBS/ OCBC/ UOB. After that, go ahead and get an individual CDP account. You can do so by following simple steps available on each bank’s website. Once done, all you have to do is print out the application form by yourself and mail it along with the supporting documents required.

Step 2: Apply for SSB

A brand-new bond will be available at the beginning of each month. Commonly, the application lasts up to 3 weeks’ time. Be aware and stay alert. You may also keep yourself updated through the website.

As specified earlier, you can get your SSB through Internet Banking or ATM machines nearby within the 3 weeks. This is where your CDP account will come in handy – you specify the amount you want to invest that month without having to commit to a term of tenure.

Once done, any amount you mentioned to be invested excluding $2 of the transaction fee will be deducted from your bank account.

Step 3: Secure your Singapore Savings Bond

Passing the application period, applicants must wait until the end of the month to discover whether or not your bond has been secured. Let’s say that month the bonds are oversubscribed, and you did not get to secure the amount you initially applied for, remaining of those will be refunded into your bank account in a day.

Bonds by SSB will be officially released during the first business day of the next month. Not to worry, you will be alerted by CDP – and you will start receiving your returns every 6 months starting that moment.

Added step on how to sell (redeem) Singapore Savings Bonds:

You can redeem your SSB at any time you wish to; regardless of your tenure plan.

How it works and what you are going to get?

Here is how it works and what you are going to get:

    1. Early redemption when there is a scheduled interest payment: you may submit your redemption request and be charged $2 of the transaction fee and you will get the principal amount with your full interest.
    2. Early redemption in between scheduled interest payment: you may submit your redemption request and be charged $2 of the transaction fee and you will get the principal amount with your prorated interest.
    3. Redemption at full 10 years terms: no redemption submission needed and the $2 transaction fee. You will get the principal amount with your final interest payment.

In regard to early redemptions, you may submit your requests through DBS, OCBC or UOB ATMs near you or through Internet Banking systems. The bonds redeemable partially, in multiples of $500. Note that you can redeem more than one bond at once. With every redemption request, you will be charged $2.

Also, it is important to note that there will be a “one-month notice” when you request to redeem your bonds. Amount requested will be automatically credited into your bank account the following month.

#7 An Overview of SSB

It is undeniable, as repeatedly mentioned in the article that Singaporean Savings Bond is the safest investment plan for a lot of people. It is very appropriate because your money is fully backed by the Singapore Government. You are at no risk to even invest to the fullest amount without a cent loss.

Besides, it is a very suitable investment engine when you are looking for something to solely stash some cash away for years. The longer you subscribe, the more you save, the higher your interest rates are.

You have absolute freedom to your own subscription. You may opt for early redemption at any time without penalties.

If you enjoy your read, don’t forget to share the article on your other platforms. With all that said, if you are in any circumstances needing immediate cash or financial help, you may contact Bugis Credit – one of the most trustworthy moneylenders in Singapore.

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