The Singapore Bonds are favored by the retail investors as these are low cost, low risk and highly liquidity and no commission is charged for buying or even redeeming.
Investment with returns which are guaranteed and on a long-term basis is what most people look for. The Singapore Government offers a perfect solution to this. The Singapore Savings Bonds (SSB) which were announced in May 2015 by the MAS (Monetary Authority of Singapore) allow the old and the young Singaporeans to have avenue for the long-term investment.
Features of the Singapore Saving Bonds:
*The most important feature of this Singapore saving Bonds is a chance to invest in a saving bond which is backed by a government, who had managed to maintain the credit rating of triple A in a consistent manner even during the period of recession. This is considered as a safe investment instrument which guarantees the principal.
*The ‘step-up’ interest which s accrued over a period of 10 years is another defining feature of the SG Bonds. This is a positive for the retail investors to choose this long-term investment plan as compared to the fixed deposits which the banks offer with a structure which is inflexible and low rate of interest.
Key Benefits of Singapore Savings bonds:
Low Risk and Safe:
As mentioned, the Government of Singapore holds the highest ratings of credit from the major agencies and this government influences the said monitory policy there is no reason the funds cannot be returned.
Entry Barriers is Low:
For each application of the Singapore Savings bonds all you need to pay is $2, which is a bank fee. There is no commission charged. These SSB’s can be bought in $500 denominations.
No Cost of Redemption and Good Liquidity:
The SG bonds can be sold to the MAS during any month without any transaction cost or penalty charged. This works out a low expense of investment and good liquidity. Early withdrawal of the Fixed Deposits attracts a penalty. These SG bonds work perfect for those investors looking to invest money in a safe environment.
Step-by-step Guide for investing in Singapore Saving Bonds for the First Time:
Following the steps listed below can help you invest in the SS Bonds.
Before you apply you need to ensure you have the listed below papers.
- An account in any local bank based in Singapore (OCBC, UOB, DBS/POSB)
- An account of CDP securities which is linked to the bank account you wish to invest in.
*How to invest in SG Bonds:
You can apply for the Singapore savings bonds in 2 ways
- You can either apply for this via an ATM which is located close by
- Or you can apply via Internet Banking under Singapore Government Securities.
It is important to ensure you have the CDP account number when you are applying. You need to have a minimum of $500 dollars when investing. You can increase this to a multiple of $500 in case you wish to invest more. You will be paying only $2 for each application.
The results are announced after the given ‘last date to apply’. In case of any over-subscription you will be investing a part of the amount you have applied for. The rest is returned to your bank account.
The Singapore Saving bonds which are allocated are issued on the 1st business day of the month following the month you has applied this for. The first interest is normally given after 6 month after the bonds have been issued. This interest is paid every six months and will be reflected in your bank statements. This is credited automatically to the account.
Benefit for the Layman:
The Singapore Saving bonds work as a boon for the older generation as this is one safe and flexible way to have enough of cash for the retirement without the low interest rates which are offered by the banks. Investors can have access to cash even in an emergency.
For the younger generation, The Singapore Savings Bonds offers an opportunity for diversification of the risks which is present in their portfolio by a portion being allocated to the SG Bonds. These investments can be easily cashed without any penalty in case you need to change the investment strategy. These SG bonds work as a perfect stepping stone into the world of investment with an initial amount for investment being low.
The Singapore saving Bonds is backed by the Government of Singapore. The eligibility for these bonds is 18 years and above. The tem for these bonds can be up to 10 years.
Rates of interest are based on the average yields of SGS the month before. These rates of interest increase every year. The rates of interest for the full 10 year term are fixed and locked before these bonds are issued.
The minimum amount to be invested is $500 with the maximum holding of the individual being $200,000. The sum which is invested needs to be in multiple of $500.
The interest is paid every 6monthsafter the bonds are issued. For investments in cash, the interest is directly credited into the bank account that is linked to the CDP Securities account of an individual. For investments SRS, the interest is paid to the SRS account.
A new saving bond is issued every month in accordance to the issuance calendar.
The results of the allotment are announced on the third last business day of a month. Applicants who have been allotted the bonds are notified by mail by the CDP. The SRS operator notifies those who have applied via the SRS investments.
For those who are unsuccessful the excess money is refunded by the second last day of the month. These SG bonds can be redeemed in any month with no penalty charged.
Singapore saving bonds is non-transferable except in specific situations which include the death of the individual holding the bond. These cannot be sold or bough in the open market.
As SG bonds can be a safe instrument to grow above your savings account interest rate for you, it does not beat inflation and is not meant for a wealth accumulating instrument to make your money work harder for you. In TheFinLens, we are able to help you invest in
1) Capital Guaranteed Savings or Retirement plans giving above 4%p.a payout rate
2) Monthly Dollar Cost averaging investment portfolio up to 19%p.a annualized returns since 2010
3) Dividend paying portfolio – giving conservatively 5-7%p.a payout
4) Capital Protected* plan – pays out monthly after 5 years for Life up to 6.3%p.a payout rate
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