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Tuesday, September 4, 2018

SINGAPORE SAVINGS BONDS OCT 2018: LOWER YIELDS BUT WHY STILL A "BUY"?


SINGAPORE SAVING BONDS OCT 2018

Dear readers, the October 2018 Singapore Savings Bond is open for application; you can find more details at this link.
I have charted the average annualized yields of the Jul 18, Aug 18, Sep 18 and Oct 18 Singapore Savings Bonds per year of the 10-year holding period as above with the figures in brown and blue corresponding to the annualized yields for the Jul 18 and the latest Oct 18 Singapore Savings Bonds respectively. From my tracking, the Jul 2018 Singapore Savings Bonds offers the best 10-year average rate of 2.63% which has since then trends lower for each subsequent issue of the Singapore Savings Bond to the latest 2.42% for the Oct 2018 Singapore Savings Bond. That's means a difference of 0.21% average return per year or 2.1% over 10 years. Or if one invests the maximum $100,000; the investor would get $2,100 lower from the dividends via investing in the Oct 2018 Singapore Savings Bond and holding the bonds to maturity vs the Jul 2018 Singapore Savings Bonds.

I would think the Singapore Savings Bonds currently offers a good yield, risk-free for a 10-year holding period plan. Thus, if investors believe the trend for Singapore Savings bonds will continue to trend low, one should invest in the latest issue of Singapore Savings bonds now before the yields get anywhere lower! In any case, one could always redeem the bonds at any time when the opportunity of a higher yield presents in the future!
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