Asked on 16 Oct 2018
Have 1.5k to invest for the tranche in Nov. Am thinking whether to consider temasek bond now. Any advice?
It highly depends on which you are comfortable with, SSB is government-backed bond and Temasek Bond being rated "Aaa" by Moody's is afterall still a corporate bond.
Returns - S$33.30 after 5 years (S$37.20 after 10 years)
Able to withdraw anytime, (within a month of processing time)
Returns - S$40.5 after 5 years
Cannot withdraw but you are able to sell back to the market in SGX (if there are buyers in the market and you might sell at a loss)
If you're adventurous enough and want to try out Temasek Bond, you can put $1,000 into that and the remaining $500 into SSB because for Temasek Bond you can only invest in denominations of S$1,000.
Do ask yourself which you are most comfortable with, never invest in something that you don't believe in. Hope this helps! :)
Can consider the Temasek bond instead as it gives 2.7% interest which is higher than what the Singapore Savings Bond is offering. Additionally, it's AAA-rated credit so it should be safe!
1 more comments
Neither for me.
Unless I am a retiree who has not enough time, I will not invest in such low yield bonds.
I will rather put money in index funds, ETF or even individual stocks.
Sure, market may fall tomorrow, but I am in for the long run. Even at age 40 (our life expectacy is more than 80 plus), there are more than enough time to buy stocks than any form of bonds.
Plus, as a Singaporean, you have plenty of bonds in your financial holdings. They call it CPF-SA.
I would say the temasek bond. it is rated AAA, and you can always sell it back to the market if you need to money for an emergency (historically, bond prices do not move MUCH, so you won't lose/gain much from selling.)
I wouldn't say it is a bet but rather which would you prefer? '' Assuming'' that both SSB and temasek have the same level of risk (or claimed to be due to temasek can be seen on par with the government itself by most Singaporeans), which would you choose?
Withdrawal anytime (volatility) with $2 processing fee
At the same time, earn step up interest. Matured after a decade
Higher interest rate than SSB within 5 years
But, lock in for 5 years
In reality, temasek is a corporate bond not sg government so hold a higher risk.
If you are unsure, why not both?
As for the portion of distribution, ask yourself which do you prefer.
I will get SSB until I hit the hot-limit which is 200k.
I love certainity, for that extra few percent of return versus the risk? Forget about it (From my perspective).
I either go low - Meaning highly secured an safe bonds or....
I go high - meaning risky bonds that have chances to default, I go for REITs, I go for blue chip stocks that typically move up and down much more.
Depends on your character and experience, if I have to give an answer, it will be SSB (Till you hit 200k)
There's no straight answer for this.
but here's are some things to consider:
on the books, Gov backed is always safer than a Company backed bond. but returns will be less.
Company backed with good rating doesn't mean wont default. just Google Hyflux.
let's not forget government backed but risk free 4% SA-CPF. The trade off is cannot withdraw.
I may not be you, but I share my mode of operation. I will max out my SA 7k contribution before I consider the SSB bonds. Then TB.
I would personally prefer to invest in the temasek bond since it has a higher interest rate.
If you were to comapre the interest rates in Nov 2018, the annualised interest rate offered by temasek bond is 2.70%, which is higher than SSB's interest rate of 2.22%.
However, the temasek bond would be affected by rising interest rates. Rising interest rates would cause bond prices to fall. Should you sell your losses at this point, you will likely incur investment losses.
Here is a brief overview of the differences between these 2 investments!
Both have their pros and cons, you should ultimately choose the bond that would be more in line with ur financial/investment goals! hope this helps!
Between those two options, i will choose the temasek bond instead.
Higher interest rates and fixed principal upon maturity
although SSB has flexible withdrawl and no loss of principal during anytime of withdrawal
and since it is a small absolute amout of 1.5k, you should leave the money there in temasek bond for long and not touch it.