Wednesday, July 4, 2018


SINGAPORE SAVINGS BONDSDear readers, Singapore Savings Bond (Aug 2018 tranche) opened for application on 2 Jul 2018 and below are the average return per year for the first ten years. For comparison, I also included in () below the average return per year for the July 2018 Singapore Savings Bond tranche.

On first glance, the Aug 2018 Singapore Savings Bond seem to offer a higher interest since Year 1 interest rate is 1.78% compared to 1.72% for the Jul 2018 tranche. But if one is to look at the average return at Year 10 of the Aug tranche of the Singapore Savings Bond, that is where the Aug 2018 average returns seems to fall short in general.

Year 1: 1.78%(1.72%)

Year 2: 1.97%(1.95%)

Year 3: 2.10%(2.08%)

Year 4: 2.21%(2.16%)

Year 5: 2.29%(2.24%)

Year 6: 2.37%(2.32%)

Year 7: 2.43%(2.40%)

Year 8: 2.48%(2.48%)

Year 9: 2.52%(2.55%)

Year 10: 2.57%(2.63%)

The Aug bonds offers an average of 2.57% over the 10-years holding period where in contrast the Jul bonds offers an average of 2.64%. But for an investor who would wish to hold the Aug 2018 bond to only Year 7 for the bonds, then he would achieve a 0.03% higher return than the Jul 2018 tranche. Thus in a nutshell, an investor buying Aug 2018 Singapore Savings bond could hold it till Year 7 to achieve a 2.43% average return versus 2.40% average return for the July 2018 tranche.

The Jul 2018 Singapore Savings Bond was very well-received due to the 2.63% average return over the 10-year holding period so much so that for those investors who have deployed $12,500 to subscribe for the bonds, they only were allotted either $12,500 or $13,000. To be frank, I am one of the investors who subscribe for the maximum possible allotment only to obtain $12,500. Just as a sharing, I have applied for Singapore Savings Bond as I want my monies to earn some interest risk-free, while having the liquidity to cash out and deploy the capital at an opportune time in the Singapore Stocks markets which is currently going south.

I reckon that the Aug 2018 Singapore Savings Bonds will be well-received by retail investors again. However, I believe the subscription may not match the Jul 2018 tranche application since the average return has become comparatively lower. And also, interest rates are going higher, hence some retail investors may want to adopt a wait-and-see attitude for even higher-interest instruments to grow their monies in a safe manner. Join the emailing list to receive regular Financial and Singapore stocks newsletters too! Like" me on Singapore Stocks Investing Facebook page to receive all posts on your Facebook as well as read more articles. Follow me on Twitter too.

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