The effective interest rate for Singapore Savings Bond (SSB) September 2024 (SBSEP24 GX24090E) is 3.10% if you held it for 10 years. As you can see from the graph above, the interest rate continued to decline over the past 3 months. The decline is aligned with the current uncertain global economic condition whereby lower inflation expectations lead to lower yields. The interest rate for SBSEP24 was 0.12% lower as compared to SBAUG24.
I believe a balanced portfolio should consist of a mix of stocks and bonds. I am in my mid-forties and Singapore Savings Bonds make up 23.31% in terms of value in my stock portfolio. Stocks offer growth potential, while bonds provide stability.
As I get older, I would consider opting for less risky investments because there is very little leeway for me to earn back the capital if I make any mistakes in our investments. With almost zero risk, buying Singapore Savings Bonds is a great way to build up my monthly passive income to help in early retirement.
What are Singapore Savings Bonds (SSB)?
Singapore Savings Bonds (SSB) were introduced in 2015 as a type of Singapore Government Securities. Singapore Savings Bonds (SSB) were designed for individual investors who want to participate in the Singapore Government Securities (SGS) market but in smaller denominations. You can buy Singapore Savings Bonds for a minimum of S$500.
With just a small administrative charge of S$2 per transaction, Singapore Savings Bonds can be suitable for young investors who wanted to start building their passive income but lack the big capital to invest in stocks. Investing in Singapore Savings Bonds is also almost near to zero risk.
When to Choose Singapore Savings Bonds (SSB)?
The returns for Singapore Savings Bonds may not be as attractive as compared to other investments such as Fixed Deposits or Treasury Bills. However, Singapore Savings Bonds is attractive in its own areas.
The minimum amount to invest in Singapore Savings Bonds is low at S$500. This is unlike other investments such as Singapore Treasury Bills (T-Bills) where the minimum is at least S$1,000. For Fixed Deposits, the minimum is usually set at S$10,000.
The high liquidity is one of the features that I like about Singapore Savings Bonds. There is no lock in period which means you can sell it anytime.
Since Singapore Savings Bonds is near to zero risks, it can also be treated as an emergency funds to complement your savings.
How will the US Federal Reserve Interest Rates Affect Singapore Savings Bonds?
When the US Federal Reserve raises interest rates, it often leads to higher global interest rates. This can influence the yields on Singapore Savings Bonds, as they are partially based on the yields of Singapore Government Securities (SGS), which are affected by global interest rate trends.
Singapore Savings Bonds Interest Calculator
Are you wondering how much interest you would earn if you held Singapore Savings Bonds (SBSEP24 GX24090E) for 10 years? To make it easy for you, Monetary Authority of Singapore (MAS) had come up with a Savings Bonds interest calculator.
Let us use an investment of S$10,000 as an example. If you purchase SBSEP24 GX24090E and held it for 10 years, you will receive a total earning of S$3,103.15. Based on the chart generated from the Savings Bonds Interest Calculator, you will receive an estimate of S$305 per year until maturity in September 2034 depending on the interest rate for that year.
Below is the interest per year for Singapore Savings Bond August 2024.
| Year from issue date | Interest % | Average return per year %* |
| 1 | 3.06 | 3.06 |
| 2 | 3.06 | 3.06 |
| 3 | 3.06 | 3.06 |
| 4 | 3.06 | 3.06 |
| 5 | 3.06 | 3.06 |
| 6 | 3.06 | 3.06 |
| 7 | 3.09 | 3.06 |
| 8 | 3.17 | 3.08 |
| 9 | 3.21 | 3.09 |
| 10 | 3.21 | 3.10 |
How To Track Singapore Savings Bonds?
I use Stocks Café to track my Singapore Savings Bonds purchases. If you like to know more about Stocks Cafe, please read up my previous review of Stocks Cafe.
How to Build a Singapore Savings Bonds (SSB) Ladder?
A Singapore Savings Bonds ladder is a strategy that involves creating a portfolio of bonds with staggered maturities. The goal is to earn a passive income while reducing exposure to interest rate fluctuations.
Singapore Savings Bonds (SSB) pay semi-annual interest and building a bond ladder allows you to receive monthly coupon payments. Each issuance of SSBs matures at different future dates. Thus, you will need to continue purchasing every issue of Singapore Savings Bonds (SSB) until you receive coupon payments every month.
Like other investors shared, the coupon payment every month is good for kopi money. I am building up my passive income for retirement. Have you started?