Wednesday 22 July 2015

Singapore Savings Bonds (SSBs) Issued in October

As MAS has just announced that the new Singapore Savings Bond (SSB) will be issued on Oct 1 with retail investors able to apply for them from Sep 1, I'm going to repost this post that I shared earlier last month, with some new information added and others updated.
Investment-grade bonds offer a good alternative to stocks especially for risk-adverse investors
(Image source: https://www.drwealth.com/2015/05/12/all-you-need-to-know-about-the-singapore-savings-bonds/)

Sharing some thoughts on the new government bonds, SSBs. I think the new SSBs being introduced are a good alternative to fixed deposits, especially since most fixed deposits last at most 3 years. The money invested can also be taken out in any given month, without loss of principal or accrued interest, which would definitely beat the fixed deposits where little to no interest is accrued if the money is withdrawn before the expiry date.

With interest rates rising on current Singapore Government Securities, these would make attractive investment vehicles as these are backed by the Singapore government and offer higher interest rates than fixed deposits if held over longer periods of time. Who knows, these could possibly serve to replace some of the regular bank deposits as they can be easily withdrawn without a loss of accrued interest and would be a good place to store some of your emergency fund, as long as you have sufficient cash to tide over the period of max 2 months before you can get your cash back (assuming that you suddenly need get cash on 2nd day of a given month, need wait until next month to submit application then get back following month). Only limit to this is the minimum $500 investment, maximum $100,000 investment as well as a cap of $50,000 for individual bond issues.

But then an increase in interest rates is something that we should be looking out for as shown in How the Economic Machine Works, as a high interest rate is able to lead to a recession. Just some extra info, investors planning to invest in the SSBs do not need to rush as the bonds will be issued every month for at least the next 5 years as mentioned by MAS

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