March 2023’s Singapore Savings Bond (SSB) has average returns slip yet again from the previous month. The 1-year return is 2.76% while holding the full 10 years gives an average return of 2.90% p.a.
The amount offered goes down to S$600 million from S$700 million and this is unlikely going to be an issue considering the previous month’s bond was significantly undersubscribed.
|Year from issue date||1||2||3||4||5||6||7||8||9||10|
|Average return per year %*||2.76||2.76||2.76||2.76||2.76||2.76||2.78||2.82||2.86||2.90|
Past SSBs compared
|Year From Issue Date||1||2||3||4||5||6||7||8||9||10|
Is there still a case for SSB?
Remember how hotly oversubscribed August 2022’s SSB was? That offered between 2.00% to 3.00% p.a. returns and us investors were fighting over scraps and getting at most S$9,500.
Times have changed, and the current 2.76% to 2.90% p.a. rates are likely to prove unpopular given how last month’s SSB was significantly undersubscribed. Is SSB now irrelevant for investors?
The good news now is that it is no longer difficult to invest larger amounts. There is still an overall limit of S$200,000 across all SSBs that an individual can own, but you can now safely invest large amounts of funds into SSB without worrying about paltry limits like $9,000 or $14,000.
Previously, SSB offered attractive rates but disbursed half-yearly coupons that can be annoying to reinvest for higher returns. This is also not so much of an issue now that high-yield savings accounts are easily available.
Some unique features of SSB
Compared to t-bills, SSBs are still a lot more liquid and you can withdraw partially or fully without any capital loss, and even get a pro-rated return down to the month of withdrawal. T-bills, on the other hand, must be held to its maturity, or sold in the resale market where there is a chance of capital loss or poor liquidity where it cannot be easily sold.
Ultimately, SSB’s greatest pro lies in its ability to give you a guaranteed interest rate for as long as 10 years, and the returns are known on the day it is announced. In the short term, its interest rates may not look attractive relative to fixed deposits, t-bills, or even bank accounts, but those products are unlikely to hold this level of interest rates beyond the next couple of years.
For funds that you don’t intend to touch for the next 3 to 10 years – a part of your emergency funds, perhaps – SSB still remains a great tool to put some money in. I can’t think of any other tool that can grant you guaranteed rates nearly 3% p.a. interest and yet allow for penalty-free withdrawal almost any time you want.
Note that applying early does not confer you any priority in the allotment process, so it is more ideal to apply nearer to the closing date. This is because your funds are deducted from your account at the point of application, and you do not get any interest for such funds.
|Opening Date||Closing Date||Allotment||Issuance|
|1st business day of month (6PM)||4th last business day of the month (9PM)||3rd last business day of the month (after 3PM)||1st business day of the following month (end of day)|
|1st February 2023 (6PM)||23rd February 2023 (9PM)||24th February 2023 (after 3PM)||1st March 2023 (by end of day)|
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