What are the Singapore Savings Bonds returns? How much interest can you earn by investing in Singapore savings bonds? Are the rates of returns high for Singapore savings bonds, compared to fixed deposit investments?
To answer the question on Singapore savings bonds returns is to ask how much interest return can one get by investing in Singapore savings bonds.
How much return can I get?
The first issue of SSB is out now. Read about First Issue of Singapore Savings Bonds here.
If you hold your Savings Bond for the full 10-year term, the average interest per year on your investment will match the return if you had invested in a 10-year Singapore Government Security (SGS) at the point of your investment.
In the last 10 years, the 10-year SGS yield has been between 2% to 3% most of the time.
We have average returns of bond yield since 1998 listed for your information.
End of Period
10-Year Bond Yield
10-Year Bond Price
1998 4.48 108.75
1999 4.56 98.65
2000 4.09 104.18
2001 3.97 97.28
2002 2.55 107.95
2003 3.75 88.1
2004 2.58 108.72
2005 3.21 103.06
2006 3.05 105.85
2007 2.68 108.26
2008 2.05 117.03
2009 2.66 98.7
2010 2.71 104.54
2011 1.63 105.42
2012 1.3 116.56
2013 2.56 101.61
2014 2.28 106.21
2015 2.34 105.51
Look at the bond yield since 2005. The highest yield was 3.21% p.a. in year 2005. The lowest was 1.3 %p.a. for year 2012.
Step-up interest:
Conventional SGS pay the same interest rate each year. Savings Bonds will pay interest that increases over time to give you an average interest rate that is linked to SGS yields.
How does the step-up interest work?
(Figures are for illustrative purposes only)
Let’s say you applied for a Savings Bond in May 2015 which has the following interest payment schedule.
Illustration of step-up interest payments
In the first year, you will earn interest based on the average 1-year SGS yields in Apr 2015 (0.9% p.a.).
In the second year, you will earn a higher interest (1.5% p.a.) compared to the first year (0.9% p.a.), so that on average over the two years you would have received the average 2-year SGS yields in Apr 2015 (1.2% p.a.).
In the tenth year, the Savings Bond will pay an interest of 3.3% p.a.. The average interest on your investment over ten years would match the average 10-year SGS yields in Apr 2015 (2.4% p.a.).
At any time during this 10-year period, you can choose to redeem the bond with no penalty and receive your principal ($1,000) with accrued interest. If you hold the bond for the full 10 years, you will get your principal back together with the final 6-monthly interest payment.
If you decide to redeem your Savings Bond early, the average interest per year will be lower than the 10-year SGS yield. For example, if you redeem it after 2 years, the average interest per year on your investment will match the return if you had invested in a 2-year SGS.
The interest rate schedule for each Savings Bond issue will be announced before applications open.
