In a short summary, Singapore Savings Bonds are a special type of Singapore government securities. There is no lock in period and you can redeem the bonds in any given month. You can apply via Internet Banking or at the ATM. The only fee you need to pay is the one time application fee of S$2.
Here are some of the benefits of the Singapore Savings Bonds. More details can be found directly at the Singapore Savings Bonds website.
- Safe. Backed by Singapore Government. Able to get back investment amount with no capital losses.
- Flexible. Can redeem the bonds in any given month with no penalties.
Why I choose to apply for the Singapore Savings Bonds?
I spent some time thinking whether I should
- Leave my money in savings account
- Put into fixed deposit
- Invest in stocks
- Buy Singapore Savings Bond
The first option is totally out. Seriously, the interest rates in my savings account is very low, earning a petite interest rates of 0.05%.
| First $10,000 | 0.0500 |
| Next $90,000 | 0.0500 |
| Next $250,000 | 0.0500 |
| Next $650,000 | 0.0750 |
| Remaining balance above $1,000,000 | 0.1000 |
I may consider the second option. However, during Chinese New Year Period, I have already allocated a portion of my cash savings and placed in a 1 year fixed deposit with POSB at an interest rate of 1.88%. It is too dangerous for me to further lock in majority of my cash in the fixed deposit.
The third option looks lucrative. Given the downside of the stock market in August, some stocks in my watch list are decent to buy. The stocks may yield a dividend of 3% to 5%. I have already went in and bought some stocks during the market downside. Like the old saying goes, “Do not put all eggs in one basket”, I should not put all my money in the stock market.
I decided to opt for the Singapore Savings Bonds. It is low risk and as well fulfill the objective of diversifying my investment portfolio. S$10,000 investment will earn me a total interest of $2,691 after 10 years. That is an effective return of 2.63% per year. The Singapore Savings Bonds website has an interest rate calculator. You simply enter the amount you wish to invest and it calculates the 10 year interest you will get back every year.
| Year | April | October |
| 2016 | S$48 | S$48 |
| 2017 | S$54.50 | S$54.50 |
| 2018 | S$96.50 | S$96.50 |
| 2019 | S$146.50 | S$146.50 |
| 2020 | S$162.50 | S$162.50 |
| 2021 | S$162.50 | S$162.50 |
| 2022 | S$162.50 | S$162.50 |
| 2023 | S$162.50 | S$162.50 |
| 2024 | S$165 | S$165 |
| 2025 | S$185 | S$185 |
| Total | S$1,345.50 | S$1,345.50 |
| Grand Total | S$2,691 | |