The Singapore Savings Bond (SSB) is a specialized investment product, which will likely be launched in the 2nd half of 2015. It forms part of the plan by the government to make low-cost (and low risk) government Bonds available to retail investors like you and I.
The concept of the Singapore Savings Bond interest rates will be linked to the long-term Singapore Government Securities (SGS) rates. But unlike SGS bonds, which pay the same interest rates every year, the Savings Bond will start with smaller interest rates that will keep rising. The longer you hold the bond, the higher your return.
One of the most interesting feature of this investment product is that a bondholder can get his money back in any month, with no penalty imposed. Unlike a regular bond or a fixed deposit, this gives an added dimension of liquidity for the bond holder.
The concept of the Singapore Savings Bond interest rates will be linked to the long-term Singapore Government Securities (SGS) rates. But unlike SGS bonds, which pay the same interest rates every year, the Savings Bond will start with smaller interest rates that will keep rising. The longer you hold the bond, the higher your return.
One of the most interesting feature of this investment product is that a bondholder can get his money back in any month, with no penalty imposed. Unlike a regular bond or a fixed deposit, this gives an added dimension of liquidity for the bond holder.
Another key design of the bond is its non-tradable aspect. This feature protects the individuals from potential capital losses in the secondary markets, making it a fairly safe and low risk investment.
Let's take a look at some of the important facts of the Singapore Savings Bond with this infographic.
.png "Singapore Savings Bond - All You Need To Know")
Other Features:
Who can buy
- Individuals only (Like You and I).
Term
- 10 years.
Method Of Payment
Method Of Payment
- Cash, the Government will consider allowing SRS or CPF to purchase in the future.
Interest
- Paid every 6 months (Twice a year).
- At issuance, rates are fixed based on the prevailing SGS yields and locked in for each issue.
- Paid every 6 months (Twice a year).
- At issuance, rates are fixed based on the prevailing SGS yields and locked in for each issue.
Issuance
- Monthly. Allocated via balloting of units if oversubscribed.
- Monthly. Allocated via balloting of units if oversubscribed.
Redemption
- Monthly, with no penalty.
- Principal and any outstanding accrued interest will be paid on redemption.
- You will always get your principal amount back in full.
- Monthly, with no penalty.
- Principal and any outstanding accrued interest will be paid on redemption.
- You will always get your principal amount back in full.
When will the Savings Bond be available
- It will likely be launched in the second half of 2015.
- It will likely be launched in the second half of 2015.
Summary
I would recommend this product for the less savvy investors who would like to achieve any of the following investment objectives:
1. Protect themselves against inflation (Although not particularly great).
2. Balance their investment portfolio.
3. Long-term savings option at a low risk (Saving for a 'rainy day').
After all, there aren't many (or any) investment products that provide principal protection. Backed by solid governance, financial stability and a diversified economy, our sovereign debt is only one of the 9 countries in the world with a AAA rating from all rating agencies.
