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Want to invest in something safe but still want decent returns?
That’s where Singapore Savings Bonds (SSBs) come in – a flexible, government-backed investment designed for people who want security with a little extra interest.
In this post, you’ll learn:
- What Singapore Savings Bonds are and how they work
- Why SSBs are attractive for different types of investors
- How you can apply and redeem them easily
Whether you’re saving for retirement, building an emergency fund, or just want a stable, low-risk option, SSBs might be what you’re looking for.
Curious to find out if they’re right for you?
Let’s dive in!
What is a Singapore Savings Bond (SSB)?
The Singapore Savings Bond (SSB) is a safe and flexible investment option offered by the Singapore Government.
If you’re looking for a low-risk way to grow your savings, this might be the one for you.
SSBs are backed by the Singapore Government, meaning your capital is fully protected, making them one of the safest investments.
How do Singapore Savings Bonds work?
Issuance cycle
A new SSB is issued monthly, giving you plenty of opportunities to invest whenever you’re ready.
Each bond has a 10-year term, but don’t worry – you don’t need to commit for the full 10 years.
You can redeem your bond anytime during this period without losing the interest you’ve earned, so it’s not locked in like some other investments.
If you’re wondering about availability, these bonds are issued regularly so you can spread your investments across different months.
This is particularly helpful if you’re looking to take advantage of different interest rates over time.
Interest payments
You’ll receive interest payments twice a year, and here’s the best part – the interest rates increase each year you hold onto the bond!
This is known as a step-up interest structure, which rewards you for keeping your money invested over the long term.
So, the longer you stay invested, the more you earn.
In the first year, the interest rate might seem modest, but don’t let that fool you.
By the time you reach the later years, the rate could be significantly higher.
If you hold the bond for the full 10 years, you’ll enjoy the maximum returns.
To get an idea of what the current rates look like, you can find the complete list of interest rates here.
Redemption flexibility
One of the standout features of Singapore Savings Bonds (SSBs) is the ability to redeem them early without facing any penalties.
This flexibility is perfect if you need access to your funds sooner than expected.
Unlike many other investment products, where early withdrawal can lead to hefty penalties or lost interest, SSBs allow you to redeem your bond anytime during the 10-year term.
When you redeem your bond, the principal amount and any accrued interest will be credited to your account within 2 business days.
Remember that there’s a small $2 transaction fee for each redemption.
Why are Singapore Savings Bonds (SSBs) attractive?
Low risk
They’re fully backed by the Singapore government, which holds a AAA credit rating from international agencies.
This is the highest possible rating, and it means your investment is as safe as it gets.
You don’t need to worry about the volatility of the stock market or sudden downturns, making SSBs a perfect choice for those who prioritise security over riskier investments.
Low minimum investment
You don’t need a large sum to start investing in SSBs.
With a minimum investment of just S$500, it’s accessible to almost everyone.
Plus, you can invest in multiples of S$500, up to a maximum of S$200,000 per individual.
This makes SSBs flexible for new investors and those looking to diversify their portfolios further.
Step-up interest rates
This means the longer you hold the bond, the higher the interest you’ll earn.
For instance, in the first year, the rate might be modest, but as each year passes, your returns will increase.
Over the 10-year term, this step-up effect can significantly boost your overall returns.
High liquidity
SSBs are also highly liquid, meaning you can redeem your bonds anytime you need access to your funds.
There’s no lock-in period or penalty for early withdrawal, unlike many other investment options.
Whether you’re facing an unexpected expense or have a change in financial goals, you can redeem your bond with ease.
Who is eligible to apply for an SSB?
To invest in Singapore Savings Bonds (SSBs), you must be at least 18 years old and a Singapore Citizen, Permanent Resident (PR), or a foreigner residing in Singapore.
This broad eligibility makes SSBs accessible to many individuals, whether just starting your investment journey or looking for a low-risk option to grow your savings.
However, there is an important requirement: you’ll need to have a Central Depository (CDP) account.
This account serves as the place where your bonds are held.
Additionally, your CDP account must be linked to a bank account with one of the major local banks – DBS/POSB, OCBC, or UOB.
If you don’t have a CDP account yet, it’s easy to open one through the SGX website or your bank, ensuring you’re set to start investing in SSBs.
How do I apply for an SSB?
Step 1: Apply via ATMs or internet banking
Applying for a Singapore Savings Bond (SSB) is straightforward and can be done through ATMs or internet banking with DBS/POSB, OCBC, or UOB.
If you prefer to use an ATM, simply head to one of the participating banks and follow the on-screen instructions under the “Investments” or “Bonds” option.
For internet banking, log in to your account and navigate to the “Singapore Government Securities” or “Investments” section.
From there, choose the Singapore Savings Bond and enter the amount you wish to invest (in multiples of $500).
Ensure your CDP account is linked to your bank account before applying, as the bonds will be credited there.
Step 2: Check if you’ve been allotted
Once you’ve submitted your application, you must wait for the allotment results.
The Monetary Authority of Singapore (MAS) typically announces the results on the third business day of the following month.
You can check your allotment status through your CDP account or your bank’s internet banking platform.
If you’ve been successful, the bonds will automatically be credited to your CDP account, and your bank account will be debited for the amount invested.
If your application wasn’t fully allotted, any excess funds will be refunded to your bank account.
You can use your SRS funds, too!
If you have Supplementary Retirement Scheme (SRS) funds, you can also use them to apply for Singapore Savings Bonds (SSBs).
The process is similar to using cash, but instead of applying through ATMs or Internet banking, you must apply via your SRS operator.
The 3 main SRS operators – DBS, OCBC, and UOB – allow you to use your SRS funds to invest in SSBs.
Simply log in to your SRS account and follow the instructions for investing in Singapore Government Securities.
Just like with cash applications, ensure your CDP account is linked to your SRS account, as this is where your bonds will be credited.
When will I get my first coupon payment?
Once you’ve successfully been allotted Singapore Savings Bonds (SSBs), your first coupon payment will be made 6 months after the bond’s issue date.
SSBs pay out interest, or “coupons,” semi-annually, so you’ll receive your payments twice a year for as long as you hold the bond.
The exact dates of your coupon payments will be clearly stated when the bond is issued, and the payments will be automatically credited to your linked bank account.
This means you won’t need to worry about tracking them manually – they’ll show up in your account right on schedule without you having to lift a finger!
Remember, the interest rates increase over time, so each subsequent payment will likely be larger than before if you hold onto the bond for longer.
But SSBs have their cons too
Non-transferable
This means they cannot be traded on the open market, unlike other bonds or stocks.
You can’t sell them to another person, nor can you use them as collateral for loans.
Essentially, once you purchase an SSB, it’s yours until you either redeem it or hold it for the full 10-year term.
For investors who value flexibility in terms of transferring or selling assets, this might be a limiting factor.
Lower returns
While SSBs are a safe and flexible investment, they do come with lower returns compared to riskier options like stocks or ETFs.
With average yields of around 2% to 3% over 10 years, SSBs are designed for investors prioritising security over higher returns.
So, if you’re looking for significant gains or have a higher risk appetite, you might find SSBs a bit underwhelming.
Maximum cap
Another limitation is the maximum cap of S$200,000 per individual.
While this is a substantial amount for most investors, it does limit how much you can invest in SSBs and, in turn, the potential returns you can earn.
If you’re someone with a larger portfolio looking for unlimited investment potential, this cap could feel restrictive.
How to redeem Singapore Savings Bonds?
Redeeming your Singapore Savings Bonds (SSBs) is straightforward and flexible.
If you ever need access to your funds, you can submit a redemption request in multiples of S$500 through the ATM or online banking of your participating bank – DBS/POSB, OCBC, or UOB.
Keep in mind that there is a small S$2 transaction fee for each redemption request, but there are no penalties for early withdrawal, which makes it easy and affordable to access your money whenever you need it.
Once you’ve submitted your redemption request, you won’t have to wait long to get your money back.
Your principal and any accrued interest will be credited to your bank account by the second business day of the following month.
Who should invest in Singapore Savings Bonds?
Individuals nearing retirement
If you’re approaching retirement, SSBs are a great way to preserve your capital while earning a steady return.
Since the Singapore government backs them and offers virtually no risk, you can grow your savings without worrying about market volatility – a critical factor when you’re looking to secure your retirement funds.
Individuals seeking a virtually risk-free, stable, and liquid investment
For those aiming to achieve short-term financial goals – such as building an emergency fund or saving for a major purchase – SSBs offer a safe and liquid option.
You can redeem your bonds anytime without penalties, making it easy to access your money when needed.
Plus, with step-up interest rates, your returns increase the longer you hold onto the bond.
Individuals looking for passive income
If you’re after passive income, SSBs provide semi-annual coupon payments that steadily add to your cash flow.
These regular payouts make SSBs ideal to supplement your income while keeping your investment virtually risk-free.
Investors looking to stabilise their investment portfolios
For more seasoned investors, SSBs offer an opportunity to stabilise your portfolio.
While they may not offer the high returns of riskier assets like stocks or ETFs, SSBs can be a solid foundation in your investment mix.
By balancing riskier investments with the security of SSBs, you can reduce overall portfolio volatility and ensure steady, reliable returns.
Frequently Asked Questions
Can I use CPF to buy Singapore Savings Bonds?
No, you cannot use CPF funds to buy Singapore Savings Bonds (SSBs).
SSBs can only be purchased using cash or funds from your Supplementary Retirement Scheme (SRS) account.
How much should I invest in the SSB?
The amount you should invest in the Singapore Savings Bond (SSB) depends on your financial goals.
You can start with as little as S$500 and adjust based on your savings and risk tolerance.
What is the maximum limit for savings bonds in Singapore?
The maximum limit for Singapore Savings Bonds is S$200,000 per individual, including your current holdings and new purchases.
Can I withdraw SSB anytime?
Yes, you can withdraw or redeem Singapore Savings Bonds (SSBs) anytime, without penalties.
Your principal and interest will be credited by the second business day of the following month.
What happens when interest rates change?
When interest rates change, the rates on newly issued SSBs may differ, but the interest rates for your existing bonds remain the same.
SSBs have fixed, step-up interest rates so they won’t be affected after purchase.
What is the expected return of the Singapore Savings Bond (SSB)?
The expected return of a Singapore Savings Bond (SSB) depends on the duration you hold it.
Typically, the average 10-year yield ranges from 2% to 3%, with interest rates increasing over time.
Conclusion
In a nutshell, Singapore Savings Bonds (SSBs) are a great option if you’re looking for a low-risk, flexible, and accessible way to grow your savings.
We’ve covered how SSBs work, from their step-up interest rates and semi-annual coupon payments to the simple application process.
Plus, you’ve learned that they offer high liquidity, allowing you to redeem them anytime without penalties, making them perfect for anyone who values safety and flexibility.
If you’re still unsure whether SSBs are the right fit for you or want to know how they stack up against other options, don’t worry – you’re not alone.
Feel free to contact one of our financial advisor partners for a free consultation.
They can help you make the best choice based on your unique financial goals.
References
- https://www.mas.gov.sg/bonds-and-bills/investing-in-singapore-savings-bonds
- https://www.mas.gov.sg/bonds-and-bills/singapore-savings-bonds
- https://www.mas.gov.sg/bonds-and-bills/investing-in-singapore-savings-bonds/how-to-buy
- https://www.mas.gov.sg/bonds-and-bills/investing-in-singapore-savings-bonds/how-to-redeem
