1.55% Interest On The Singapore Savings Bond

I have been monitoring the Singapore Savings bonds for quite some time now since its launch in 2015. The interest was not that attractive to me in the past until now when I notice the first year interest for this month's SSB is at 1.55%. This is higher than most fixed deposits currently and definitely a good place to park extra cash in.

The attractiveness of the SSB

What is so attractive for the SSB is that it is capital guaranteed so there is no risk of losing your capital. There is also the flexibility to redeem the bond every month so we do not have to lock in our money inside for one year like what is required for fixed deposits. This presents a very good opportunity to get higher interest while still maintaining the flexibility for our money.

The below table shows the interest for February 2018 SSB which will be issued on 1st Feb 2018. As we can see, the 1st year interest is already at 1.55% and if we keep our money inside longer, the interest steps up as well.

Details and buying the SSB

Some details of the SSB are as follows:

• The 1st interest payment will be made on 1 Aug 2018, and subsequently every six months on 1 Feb and 1 Aug every year. 

• You can invest a minimum of $500, and in multiples of $500 up to $50,000 for this issue. The total amount of Savings Bonds held across all issues cannot be more than $100,000.

• Application starts from 2 Jan 18 and closes on 26 Jan 18 (9pm)

• Apply through DBS/POSB, OCBC and UOB ATMs and Internet Banking, OCBC Mobile Application from 7.00am - 9.00pm, Mon - Sat, excluding Public Holidays. On 2 Jan 2018, these channels will be open from 6.00pm to 9.00pm. CPF and SRS funds are not eligible.

How to redeem the SSB?

As mentioned earlier, there is a flexibility of redeeming the SSB every month just in cash you need the money. Similarly to buying the SSB, you can also redeem the SSB through the DBS/POSB, OCBC or UOB ATMs, or online through DBS/POSB’s Internet Banking portal. 

The redemption period opens at 6pm on the 1st business day of each month and closes at 9pm on the 4th last business day of the month. Redemption proceeds will be paid by the end of the 2nd business day of the following month.

Do note that the SSB pays interest every 6 months. If you redeem your bond when there is a scheduled interest payment, you will receive the scheduled interest together with your redemption amount. If you redeem before the scheduled interest is paid, you will receive a pro-rated amount, called the accrued interest, which is the interest you have earned but have not been paid. In essence, even if you redeem the bond early before the interest payment, you will still get pro-rated interest. 

I will be investing some of my money in the SSB for this month as the interest is quite attractive. Nowadays, the stock market valuation has been quite high and I will be looking to re-balance my portfolio to sell some of my stocks which are already overvalued. 

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