Sunday 24 December 2017

Singapore Savings Bond

I came across Singapore Savings Bonds when reading through a few financial blogs like ASSI, investforyourself and Seedly and they mentioned about some benefits of the SSBs. I read through the posts by them and found SSBs to be a good parking place for extra cash.
Being a cautious investment who looks for investment with low risks and hopefully mid returns, SSBs seem like a pretty good investment with returns. I realized it is a pretty good balance/diversification to my stocks portfolio.

Besides being a good diversification to my portfolio, my mum is reaching retirement age soon and I have recently reviewed her assets/cash and realized that all these years she has been keeping her money in the bank. I felt that it was pretty wasted as her cash was not put to good use and really the yield was mostly sad. Well, what’s done been done so I told her about the SSBs being a better alternative to the bank account, it was pretty tough getting her to trust me but I’m glad and now she has placed some of her savings into SSBs.

I hope that more people can find out about this because I find it a really good investment option for people who are afraid to invest in stocks but don’t want their money to earn only a low interest in the bank. The SSBs is really a good place to park your extra cash at.

1. Singapore Saving Bonds

So assuming a person decides to put $20 000 into SSBs and let's assume it's for SBJan2018. The interest rates for SBJan2018 is showed below. Using the interest calculator provided by SSB, we can see that the total interest earned when held to maturity of 10 years would be $4328. We can also see that the interest payout increases each year.

2. Fixed Deposit

On the other hand, assuming another person has $20 000 and places it in a fixed deposit with 1.15% interest per annum. We will assume they place it for 10 years. The total interest earned would be $2422.75 for 10 years with $20 000.

SSB is a better choice in that the interest is compounded and hence interest payout gets higher every year. SSBs also provide better liquidity where a month of notice is needed to get back your cash, no lockup period is enforced. Do note that $2 is required when you place your money in SSBs and when you want to take it out earlier it is another $2.

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