Are Singapore Savings Bonds a Good Investment?

January 4, 2023

Singapore Savings Bonds

With interest rates at their highest levels since before the Global Financial Crisis in 2008, investors in Singapore now have options.

Previously, from 2009-2021, we were in an era of “There Is No Alternative”. That meant that investing in stocks was the only way to go when we wanted to put our money to work.

However, now large banks here in Singapore are offering higher interest rates on savings accounts and other instruments, such as fixed deposits (FDs) are also giving investors a higher yield.

One hugely popular bond instrument among Singaporeans are Singapore Savings Bonds (SSBs).

So, what should investors know about them and, crucially, are they a good investment right now?

SSBs give guaranteed yield and payout

For investors, the great thing about SSBs is that they provide a safe and reliable way to earn passive income.

That’s because they’re bonds backed by the Singapore government. They also give buyers a guarantee on receiving your full investment amount back with no capital loss whatsoever.

SSBs are issued monthly and have a tenure of 10 years.

Most importantly, though, anyone over the age of 18 can invest in them and they can be redeemed at any time with no penalty.

Given this, SSBs are a great tool to earn income as rates have been rising. To illustrate this, just take a look at the February 2022 issue of SSBs.

They gave investors a paltry interest rate of 0.52% in the first year. Fast forward to the February 2023 issue of SSBs and the interest rate in the first year is now 2.84%.

Things investors should note on SSBs

For anyone interested in buying Singapore Savings Bonds, it’s important to remember that you can invest in them with as little as S$500.

You can then invest in multiples of S$500 thereafter. However, the maximum amount any individual can hold (at any one time) in SSBs is S$200,000.

We should also be cognisant of the fact that interest payments are made every six months – from the date of issue.

But if you do redeem your SSBs early, your interest payments will be pro-rated and paid along with your redemption proceeds.

Are SSBs are a good buy right now?

So, how should investors be assessing SSBs in this higher interest rate environment? First off, they’re an extremely safe investment.

That’s a positive. Yet, the interest rate of 2.84% is still well below the Singapore inflation rate of around 5-6%.

It’s important that investors remember that the payments you receive will be static at 2.84% (for the February 2023 issue) for the first six years, before stepping up to 2.98% in the seventh year.

By year 10, the interest rate will be 3.33% but over that time, inflation will have had a decade to eat into your capital that’s been invested in SSBs.

So, as a savings mechanism or alternative for cash, SSBs are a great option. They are relatively liquid but do note that you will have to wait until the beginning of the next month for the funds to appear once you redeem SSBs.

That means that, though they are relatively liquid, they aren’t as liquid as cash or money market funds – which are either immediately at your disposal or can be accessed within a couple of days.

The bottom line is that SSBs offer a solid option for Singapore investors to save cash while earning a yield or having your emergency funds work for you. But as an investment, there are much better options out there.


Tim Phillips

Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth.

He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer.

In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.

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