Singapore Saving Bonds (SSB)
Asked on 13 Mar 2019
Hi members, i recently went to OCBC to opened up my son kid savings account :) of $530+. I saw this cardboard on the counter showing fresh fund minimum $20,000 for 1.75% p.a. The saying...Sad to say (The rich get richer. The poor will get poorest). unless you are really struggling to save bit by bit for years for this minimum funds. How many of us will be able to save this amount of moneys and how long will it take. It took me from 2012 to last year 2018 save up to $11,000 (7 years) with $200 set aside every month with beginning 1st year $100 monthly. Last month i saw Maybank offer a little better with $20,000 for 2.05%. With smaller fund I feel SSB is still better than parking your extra funds in your original savings account. For me personally I'm placing any as my wife is from Vietnam. I be flying there to place a fix deposit for 7.8% p.a. if not given a options SSB is still better than bank offer.
It depends. You really need to compare the interest rates for both SSB and FD at the very point of time you are going to invest. Obviously, choose the ones that will give the better interest rate.
In the recent periods where the interest rates for SSB has been falling, short term fixed deposits have also become an attractive alternative for parking your short term funds. Keep a look out for CIMB's Fast Fixed Deposit promo in tenures of 3/6/12 months for their exclusive online rates.
I would prefer to put it in ssb, as it allows to withdraw anytime i want so it is more liquid. Ultimately, it depends on your prefernce. The ssb for this few months are lower than a fixed deposit so remember to do your own due dilligence.
I have to agree with Mr Gabriel Tham. SSBs are a relatively new debt instrument which should be utilized more by Singaporeans, given the almost guaranteed principal due to government backing and the unique liquidity as compared to typical bonds that have to be sold in the exchange pre-maturity.
Fixed deposits seem almost unattractively sluggish in comparison, given that they lock up your deposits for 3 or more years usually. Purchasing a SSB on a good interest rate is a good way to make sure that your emergency savings don't just sit under your bed/ in your bank account earning 0.075% interest per year, but instead beat inflation and still have spare for you to do reinvestments!
I feel that both are good in its own way so i personally would put my money in both. However, if i were to choose one i would choose the SSB since i do not need the money now and there is a higher interest rate.
There is an article on the seedly blog about this topic you may want to refer to it !
hope this helps !
Higher interest rate.
Good liquidity, 1 month notice to withdraw.
Pro-rated interest on early withdrawal.
Increased interest rate the longer you hold.