Update on Singapore Savings Bonds June 2016

Singapore-Savings-Bonds-June-2016

The effective return per year for Singapore Savings Bond fell to a low of 1.94% for June 2016 before recovering to 2.06% for July 2016.

If you have followed my blog, you know that I have subscribed to October 2015 Singapore Savings Bond. I have received my first payout in April 2016. The next payout will be in October 2016.

Besides the Singapore Savings Bond, I am curious whether there are other debt instruments with low risk and acceptable returns. After some searching, I found that there are various marketable debt instruments issued by the government, mainly being Bonds, Treasury Bill (T-bills) and of course the Singapore Savings Bond.

From MAS website, the difference between T-bills and Bonds

T-bills are short-term securities that mature in one year or less from their issue date. T-bills are bought and sold at a price less than their face (par) value, and when they mature, the Government will pay the holder of the T-bill an amount of S$ equivalent to the face value of the bond. Therefore, the interest earned on the T-bill is the difference between the purchase price of the security and its face (par) value. The Singapore Government issues 3-month and 12-month T-bills.

Bonds are debt securities that pay a fixed rate of interest (called the coupon), usually every six months, for the life of the securities and then their face (par) values on redemption on maturity. In Singapore, SGS bonds are issued with maturities of 2, 5, 7, 10 and 15 years.

Based on the MAS issuance calendar, the next T-bill issuance date is on 20th October 2016.

Has anyone of you applied for or held Singapore Treasury Bills before?

 

Update on Singapore Savings Bonds March 2016

Singapore Savings Bonds March 2016

I have been monitoring the Singapore Savings Bonds for the past few months, hoping for interest rates rise. I was hoping for safe heaven to park my excess cash. However, the results have been disappointing. The effective return per year for Singapore Savings Bonds seems to be trending down and even fell to a low of 2.19% for the month of April 2016. The lowest yielding stock in my current portfolio gives an estimated return of 2.40% per year. The interest rates  of the OCBC 360 account can easily beat the Singapore Savings Bonds.

I am glad I have subscribed to October 2015 Singapore Savings Bonds which gives an effective return of 2.63% per year. I am expecting my first payout from Singapore Savings Bonds next month.

Update on Singapore Savings Bonds December 2015

Singapore Savings Bonds December 2015

It has been 3 months since Singapore Savings Bonds have been launched. Personally, I feel that the effective return per year has not been impressive with interest rate as low as 2.44% in December 2015 Singapore Savings Bonds. The highest ever achieved was 2.78% in November 2015. I missed the boat!

I have subscribed to October 2015 Singapore Savings Bonds which currently makes up 6% of my stock portfolio. I am happy with 2.63%, considering that Singapore Savings Bonds is a risk-free investment as compared with alternatives such as fixed deposits, equities, structured notes or funds that offer higher potential returns but come with higher risk.

While building on my war chest, I shall be keeping an eye on higher interest rates. When comfortable with the interest rate, I shall buy more Singapore Savings Bonds. The maximum one can buy is $50,000.

The effective interest rate for January 2016 is 2.58%, slightly better and comparable to October 2015 rate.

Month Oct 15 Nov 15 Dec 15 Jan 16
Effective return per year (%) 2.63 2.78 2.44 2.58