What Are Singapore Savings Bonds, And Are They Still Worth It?

Singapore Savings Bonds

I put all of my extra money into DBS Multiplier at one point. It earned 2.3% and could be cashed out at any time. Those were the good old days. It's bad that I no longer live in Singapore because I have some extra SGD that I want to take a short-term interest in but can still get at any time. When things are like this, I normally choose Singapore Savings Bonds. However, the Singapore Government Securities (SGS) yield curve falling to the bottom has been a pain.

Strategy	Description
Buy Long-Term Bonds	Hold for 10 years to secure stable returns.
Reinvest Interest Payments	Reinvest earned interest for compound growth.
Use as Safe Investment Tool	Ideal for low-risk, stable returns.
Diversify Portfolio with SSBs	Add SSBs to balance risk in your portfolio.
Buy During High Yield Periods	Maximize returns by purchasing during high rates.

How Do Singapore Savings Bonds Work?

The Singapore Savings Bond (SSB) works in a few short steps, but most of you should already know. In Singapore, the Monetary Authority of Singapore (MAS) makes a unique bond called the Singapore Savings Bond. It's a mix between a savings account and a Singapore government bond.

You put money in it and get interest on it twice a year. You have up to one month to give notice before cashing them in. If you do, you'll get back the full amount of the loan plus any interest that has been added. You can only keep the bond for 10 years. Anyone in Singapore can buy up to $200,000 worth of Singapore Savings Bonds, safe investments with no risk.

Here is a rough outline of the application schedule. You have to apply for Singapore Savings Bonds for next month. You can also ask to get the money from any ties you have this month at the beginning of the next month.

Singapore Savings Bonds Have No Chance Of Gaining Value

One interesting thing about Singapore Savings Bonds is that you can't make money by selling them back to the government, even if the interest rate goes down. This isn't possible with SGS or US Treasury bonds. I have a lot of Singapore Savings Bonds from January 2019. Right now, the market looks great because the yield on a 1-year bond is 2.01%, and the yield on a 10-year bond is 2.5%.

If they were exchanged often, I would have a cash gain of at least 10%. But because this is a Singapore Savings Bond, I could only get the face value back right now if I turned it in. You can't use a Singapore Savings Bond to make money on the stock market. Returning to the idea of the "greater fool," this is not how the Singapore Savings Bond can be used.

If you want to sell your Singapore Savings Bond, don't give it to the Singapore government. That's it; the only reason to buy a Singapore Savings Bond is for the return. Most applications for the SSB were made between March and April 2019, when the 1-year rate was 1.95%. Since then, they have been going down by a huge amount, which shows how smart Singaporean investors are.

The Pros

The rates of return on investments are set. You get your money back and a set interest rate when the bond matures. You know for sure that you'll get your money back.
Not as risky as stocks. Bondholders get a set amount of money back on their capital, and if the business fails, they get paid before the owners.
It's not as unstable. As interest and inflation rates change, so does the value of a bond. However, bonds tend to be more stable than stocks.
Bonds have clear grades. Credit rating firms like Moody's and Standard & Poor's rate all loans but not stocks. This helps buyers pick a bond, but you should still check facts and study before putting money into a bond.

The Cons

The rates of return on investments are set. This makes buyers feel safer but also means they can't make as much money as possible if they put their money in stocks.
There needs to be more money put in. Some bonds are as cheap as $1,000, but others may be too expensive for some buyers to afford.
It's not as easy to sell as stocks, especially. Many people may be willing to buy some bonds, like people from the US Treasury and big companies. But there may be fewer people willing to buy bonds from a smaller, less safe financial business. Also, selling bonds worth a lot of USD will be harder because fewer people want to buy them.
There is interest rate danger in front of you. Interest rates have a greater impact on the value of bonds than they do on the value of stocks. You might not care if you maintain the bond until it matures and get interest payments. However, bond owners are more likely to lose money if interest rates rise.

What Are Singapore Savings Bonds, And Are They Still Worth It?1 — **Singapore Savings Bonds1**

FAQ

1. Can I lose money with Singapore Savings Bonds

No you cant lose your principal with Singapore Savings Bonds. The Singapore government guarantees your capital so its one of the safest investments around. The only real loss is opportunity cost if yields elsewhere rise.

2. Are SSBs better than fixed deposits

It depends on the timing. When SSB interest rates are high they often beat fixed deposit rates especially with the flexibility of early redemption. But if rates are low FDs might offer better short term returns.

3. Can foreigners invest in Singapore Savings Bonds

Unfortunately no. Only Singaporeans PRs and those with a Central Depository CDP account in Singapore can apply. So if you've moved overseas like I did you're out of luck unless you still qualify.

4. When is the best time to buy Singapore Savings Bonds

When the yield curve spikes. Keep an eye on MAS announcements and grab them during periods of higher interest rates to lock in better long term returns.

Conclusion

Singapore Savings Bonds are a low risk flexible way to park your spare cash especially when interest rates are attractive. They're not built for trading gains but they shine in capital preservation. For investors seeking stable no fuss returns SSBs still make a lot of sense.