A break from the trend of massive oversubscription, January 2022 SSB (SBJAN23 GX23010Z) saw only minor oversubscription. Of the $900 million offered, $909.7 million was applied for. The demand for this SSB is considerably weaker than the previous few months.
|Year from issue date||1||2||3||4||5||6||7||8||9||10|
|Average return per year %*||2.95||2.95||2.95||3.02||3.09||3.13||3.16||3.19||3.23||3.26|
Maximum amount of S$173,000 allocated per person
As such, the maximum amount is a high S$173,000.
If you subscribed to S$172,500 or less, you will get the full amount you subscribed for.
Applications above this figure will get either S$172,500 or S$173,000 on a random basis, and approximately 95.93% of such individuals would be allotted the higher amount. The rest of your funds should have been refunded to you.
The maximum amount is very roomy considering how each individual can only hold S$200,000 of SSBs.
Put funds into SSB, or place them in savings accounts?
With savings accounts giving as high as 5% p.a. interest and t-bills at around 4% p.a, the weaker demand for an SSB that offers at most 3.26% p.a. is understandable. However, it is important to note that bank deposit rates can change at the bank’s whim, often with a month’s notice. T-bills, of course, have relatively short tenures as well. While it seems that interest rates would stay high in the next couple of years at least, deposit rates will not perpetually be at this high rate. It was just not too long ago where we saw rates as close to nothing during the peak of the pandemic.
Singapore Savings Bonds, on the other hand, will guarantee its returns for as long as 10 years. This makes SSBs still viable for medium-term savings. The dilemma would hence be between trying to get the higher returns of shorter-term instruments like savings accounts and t-bills, and trying to lock in the reasonable amount of interest SSBs give over a 10-year period.
In my view, the obvious answer would be to have a mix between the two. For money that is going to be used in the short-term and a good bulk of one’s emergency funds can be placed into savings accounts and t-bills. Another part of the emergency funds as well as longer-term goals, say 3 years or more, can be placed into SSBs. Importantly, I also believe that long-term goals (10 years or longer) should still be achieved by investing and I intend to talk more about this soon.
Personally, a big part of my emergency funds are kept in a banking account. On the other hand, I also contribute to my Supplementary Retirement Scheme (SRS) account, then use most of the funds to place into SSBs.
Funds in my SRS are used to invest automatically each month. When the available funds run out, I either contribute more (subject to the yearly contribution cap) or withdraw from the SSBs I’ve bought with SRS funds. Subscribe to my Telegram if you want to see a future piece on my SRS/SSB investment strategy. You can also take a look at my Savings page for other savings instruments.
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