NTUC Capital Plus Versus Singapore Savings Bonds

NTUC Capital Plus is a single premium savings plan that gives you a lump sum payout with guaranteed return of 2.13% per annum over 3 years. Instead of the minimum sum of S$20,000 that was offered in the previous tranche, the minimum amount for the current NTUC Capital Plus is only S$5,000 which you can pay using cash or using your Supplementary Retirement Scheme (SRS) fund.

I personally think it is a good choice to use your Supplementary Retirement Scheme (SRS) funds to purchase Capital Plus for a higher guaranteed yield since SRS can only be withdrawn after your retirement age.

Using the calculator that is offered at NTUC income’s website, I opt for the minimal investment amount of S$5,000.

NTUC Capital Plus Versus Singapore Savings Bonds

How does this fare against the Singapore Savings Bonds? The current issue of Singapore Savings Bonds (SBAPR20 GX20040X) offers an average interest rate of 1.63% over 10 years.

Even NTUC Capital Plus is a clear winner here with an interest payout of S$326.35 at the 3rd year, let us check how much interest will you receive if you redeem the Singapore Savings Bonds early at the 3rd year.

Based on the table below, it seems that the interest rate for April 2020 issue of Singapore Savings Bond is consistent at 1.46% for the first 3 years. You receive S$73 per year.

The total interest you will receive is S$73 per year x 3 years = S$219 if you held Singapore Savings Bonds (SBAPR20 GX20040X) and redeem it at the 3rd year.

NTUC Capital Plus Versus Singapore Savings Bonds Versus SPH REIT

You probably would have read about the latest Endowment Plan offered by NTUC Income. The latest tranche NTUC Capital Plus (CSN2) offers you 2.3% guaranteed yield per annum. The endowment is a 3 year single premium endowment plan which you can purchase via cash or using your Supplementary Retirement Scheme (SRS) fund. There is a minimum premium of S$20,000. When the policy matures 3 years later, you get a guaranteed maturity benefit. This means that if you place S$20,000, at the end of 3 years, the maturity value will be S$21,412 inclusive of your principal amount and thus a profit of 7.06%.

NTUC Capital Plus (CSN2) Versus Singapore Savings Bonds

How does this compare to latest issue of the Singapore Savings Bonds? Let say if you have purchased S$20,000 of the latest issue of Singapore Savings Bonds (September 2019 GX19090H), you will get a total return of S$990 if you redeem it in September 2022. NTUC Capital Plus (CSN2) wins!

NTUC Capital Plus (CSN2) Versus SPH REIT

How does NTUC Capital Plus (CSN2) fare against REITs? In my opinion, REITs are low risk investment instruments. For comparison, I will use SPH REIT which I felt that the share price has been relatively stable over the years. Based on a distribution of 5.54 cents in FY2018 and the current price of S$1.10 (as of 27 August 2019), this translates to a dividend yield of 5.04%.

If we have bought SPH REIT today, 3 years later, we should collect an estimated total dividends of 5.04% x S$20,000 x 3 years = S$3,024. SPH REIT wins! The risk here is that there is no guarantee you can get your principal amount of S$20,000 back 3 years later as this is subjected to the stock market conditions at that point in time.

Conclusion

NTUC Capital Plus (CSN2)Singapore Savings Bonds (GX19090H)SPH REIT
Total (S$) collected based on investment amount of S$20,000 for 3 yearsS$1,412S$990S$3,024

This is not a recommendation to buy or sell the above products but for illustration purposes only. If you can stomach the volatility of the stock market, then consider REITs for higher returns. Otherwise, NTUC Capital Plus may be a better choice if you have spare cash to lock down for 3 years. On the other hand, it does make sense to use your SRS to purchase NTUC Capital Plus (CSN2) for the higher yield since SRS can only be withdrawn after your retirement age. For those who foresee you need cash on hand in the near future, the Singapore Savings Bonds is almost risk free and safe haven.