Update on Singapore Savings Bonds August 2016

Singapore Savings Bonds August 2016

It has been two months since I did an update on Singapore Savings Bonds. Singapore Savings Bonds is really doing badly. The effective return per year for September has fallen to a low of 1.75%.

How was Interest Rate for Singapore Savings Bonds Determined?

If you didn’t know, interest rates for Singapore Savings Bonds are determined by the average Singapore Government Securities yields in the month before the announcement. The average yield for Singapore Government Securities is between 2% to 3%.

Singapore Savings Bonds Take Up Rate

Being curious about the monthly take up rate for Singapore Savings Bonds, I extracted the below statistics from Singapore Government Securities website.

As you can see below, the strongest take up was when the Singapore Savings Bonds was initially launched in October 2015.  Starting from January 2016 onward, the take up rate fell drastically. There is slight improvement in take up rate from June 2016 onward.

Month Issue Code Total Applied ($)
October 2015 GX15100F 413,161,000
November 2015 GX15110T 257,328,500
December 2015 GX15120V 40,987,500
January 2016 GX16010N 43,957,000
February 2016 GX16020F 28,400,500
March 2016 GX16030T 25,765,500
April 2016 GX16040V 18,989,500
May 2016 GX16050Z 24,678,000
June 2016 GX16060X 21,999,000
July 2016 GX16070A 25,220,000
August 2016 GX16080S 28,017,500

The Importance of Financial Literacy – Unit Trust

Rich People

Recently, my wife has just gotten her annual performance bonus. She told me she want to invest. If she does not invest, her money will depreciate over time. Thus, I asked how? She replied that her company has just invited a financial planning company to give a lunch time talk. She indicated her interest to let the financial planner plan for her how to “grow” her money.

I told her based on my experience, most financial adviser will surely either sell her endowment or unit trust. She refused to listen and went ahead to meet with the financial adviser. I was right! The financial adviser tried to sell her unit trusts.

I used to invest in unit trusts in my earlier investing days. What most of us didn’t know that the fund manager makes money whether the funds perform or not. If you read up about the funds, watch out for the section called Fund Charges. It is not a one time charge. They charge you annually.

Fund Charges

On a separate note, my wife claimed one of the fund that she bought last year pays her dividends quarterly. I asked her.

  1. Is the price on an uptrend or downtrend? She replied going downtrend.
  2. Overall, are you making a gain after deducting the losses? Have you collected more money than currently the amount the fund is losing? There was a dead silence.

The person from the bank who sold the unit trust to her has changed job. She collected dividends consistently but overall, the unit trust is making a loss. In layman terms, the fund is paying my wife back her own money without any gains.

I hope readers can share this and learn how to better manage your hard earn money.