The next best invention by the Singapore government other than 9% GST. Putting your money in a bank account gives a measly 0.1% interest. There are a myriad of other instruments out there that will give you more but the investor has to make a choice between risk, liquidity or returns.
Investing in the stocks market is a high risk, medium liquidity and high returns. It is for the better informed and not for the faint hearted.
Investing in the fixed deposit offers low risk, low liquidity and medium returns. It is suitable for investors who have a good amount of spare cash on hand with no near term use.
Investing in property is medium risk, low liquidity and high returns. Good for investors who have substantial amount of capital and with a long term view.
For the majority of us saving money, most of us would just put the money in regular savings or a fixed deposit with a bank. The government has launched the SSB in 2015 to beat the banks at this fixed deposit game. You will get a tool with low risk, high liquidity and medium returns which is better than FDs. There are limitations to this tool though. It is capped at $200,000 per individual and the application process to own it is not straight forward which puts many investors out of reach. You can use cash or SRS.
These are some of the key benefits of the Singapore Savings Bond (SSB):
- It is safe. The bond is fully backed by the Singapore government with Triple A rating
- Guaranteed to get back all capital at any point of exit without any losses
- Exit on any month, no penalties
- Starting small with as little as $500
- Benefits of saving for retirement while being prepared for rainy day
- Diversify range of investments
Some of the key product features:
- Term 10 years
- Issuer : Singapore government
- Interest rates benchmarked against the SGS the month before ranges from 1%-2%
- Interest payments every 6 months
- Minimum $500 and maximum $100,000 per individual
- New issuance every month
- Exempted from tax
Steps to buy the SSB:
Step 1: Start a CDP account https://www2.sgx.com/securities/retail-investor/cdp-initiatives with Direct Crediting Service. Link it to your OCBC, DBS, POSB or UOB bank account.
Step 2: Figure out what is the bond on offer for the month https://www.mas.gov.sg/bonds-and-bills/Singapore-Savings-Bonds
Step 3: Applying for the bond via ATM or internet banking with one of the banks (OCBC, DBS, POSB or UOB).
Step 4: Watch your savings grow at https://eservices.mas.gov.sg/ssb/