Wednesday, April 1, 2015

Singapore Saving Bond

Hi Everyone,

I believe most Singaporean or people here had heard about Singapore Saving Bonds.

A short description:

Singapore, 30 March 2015…The Monetary Authority of Singapore (MAS) today provided more information on the features of Singapore Savings Bonds. This followed Senior Minister of State Mrs Josephine Teo’s announcement that the Government and MAS would introduce the Savings Bonds programme to provide individual investors with a long-term savings option that offers safe returns . This will expand the range of simple, low-cost investment options available to individual investors to help them meet their long-term financial goals and retirement needs.

The basics

.    Principal guaranteed: Investors will always get their investment amount back in full. In other words, they will not suffer any capital losses.

ii.    Term of ten years: This allows individuals to save for the long term and receive higher long-term interest rates (which comprise what investors call “term-premium”).

iii.    Step-up interest: Investors will earn interest that is linked to long-term Singapore Government Securities (SGS) rates. Unlike SGS that pay the same coupon each year, Savings Bonds will pay coupons that “step-up” or increase over time. As a result, the average interest rate is higher the longer the Savings Bonds are held.

iv.    Monthly issuance: This makes Savings Bonds accessible on a regular basis.

v.    Flexible redemption: Bond-holders can choose to get their money back in any given month, with no penalty. This means that individual investors do not have to decide upfront how long they wish to invest.

vi.    Small minimum investment amount: A minimum of $500, and in subsequent multiples of $500 up to a limit to be announced later. A limit will help to maximise participation and to ensure a broad reach.

vii.    Only individuals can apply for and hold Savings Bonds.

Personal View

For me, I would think that it will be a good way to diverse my portfolio as my current portfolio only consist of OCBC 360 account and equity. I did not touch on any bonds yet so this might be a good bond for me to go into. 

The risk is minimal as the principal is guarantee, which is suitable for people like me who seeks for low risk. So if you are seeking for low risk investment, I believe this would be a good bond to invest. However, we would still need to wait for the final information about this bond to come out before making any rash decision.  

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