It’s the midst of the elections season and this has been buried among the numerous articles on candidates, parties and manifestos. MAS announced yesterday that $1.2 billion of the Singapore Savings Bonds (SSB) will be up for application starting from 6pm on 1st Sept until 25th September.

Here’s what you must know about the first issue of the Singapore Savings Bonds,

  • What you need:
    1. Bank account with DBS/POSB, OCBC or UOB
    2. An individual CDP Securities account linked to any of your bank accounts through direct crediting service (DCS)
  • First set of bonds will be issued on 1st October and will have a 10-year term
  • Interest will be paid twice a year on 1st April and 1st October on a Step-up basis – the longer you hold it, the higher the returns will be.
  • For those that cannot commit to holding the bonds long-term, here’s the interest rates for the first bunch of Savings Bonds.

ssb

So if you hold the Singapore Savings Bonds, you stand to earn 2.63% interest per annum on average over the 10 year period. To be that into context, the Bonds are pretty competitive compared to other financial assets.

For example,

comssb

Compared to most bank accounts, Singapore Savings Bonds actually offers a higher interest rate, whether you choose to hold it for one, five or ten years. While there are some like OCBC’s 360 account that offer significantly higher interests, the bonus interest applies only on the first S$60,000 and the bonus interest is only earned by ensuring that your transactions revolve around an OCBC “ecosystem”.

Comparing to Endowment plans, Savings Bonds admittedly offer lower interest rates but more often than not, endowment plans also have a significantly longer term of up to 25 years. Endowment plans also do face the possibility of running into losses and there are other charges involved that will eat into the returns earned. On the other hand, the Singapore Savings Bonds will be backed by the Singapore Government, which is part of a small bunch to receive AAA ratings from the top international credit rating agencies.

So perhaps, if you have some cash to spare, consider putting it in Singapore Savings Bonds.