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SSB vs SGS: When it comes to investing for the future, there are many options available to choose from. One option is to invest in bonds. There are two types of bonds available in Singapore – Singapore Savings Bonds (SSB) and Singapore Government Securities (SGS). So, which one should you choose?
Both SSB and SGS are different in terms of their features, benefits, and risks. SSB is a lower-risk investment option with a guaranteed interest rate, while SGS is a higher-risk investment with the potential for higher returns.
To decide which type of bond is right for you, it is important to understand the differences between them. Keep reading to learn more about the differences between SSB vs SGS, and which one is right for you!
The Singapore Savings Bonds (SSB) is a long-term investment scheme offered by the Government of Singapore. It was introduced in 2015 to help individuals save for their future needs.
The SSB operates similarly to a regular savings account; however, there are some notable distinctions. Firstly, the interest rates on the SSB are fixed for the entire duration of the bond. Consequently, you will have full transparency regarding the interest earnings right from the outset. Secondly, the SSB offers the flexibility of being held for up to 10 years. This extended holding period enables you to adopt a more long-term perspective on your investments, potentially leading to higher returns.
Investing in the Singapore Savings Bonds (SSB) is easy. You can do it through any of the major banks in Singapore. You will receive interest on your savings every six months, and you can redeem your SSB at any time during its term.
Read on to learn more about the differences between SSB vs SGS.
The Singapore Government Securities (SGS) bonds are issued by the Singapore Government as a way to raise funds to finance its expenditure. The bonds are denominated in Singapore dollars and are issued in tenures of 2, 5, 10, 15, 20 or 30 years. They are considered to be low-risk investments, as they are backed by the full faith and credit of the Singapore government. Continue reading to learn more about SSB vs SGS.
The bonds are denominated in Singapore dollars and have a fixed coupon rate and maturity date, which is determined at the time of issuance. Investors who purchase SGS bonds will earn interest on their investment at the fixed coupon rate until the maturity date. On the maturity date, the government will repay the principal amount of the bond to the investors.
They are issued through regular public auctions and are tradable in the secondary market, which means that they can be bought and sold among investors after the initial issuance. SGS bonds are considered as a benchmark for the Singapore Bond market and also considered as safe haven for investors. Additionally, the SGS bonds are also used as a benchmark for other fixed-income securities in Singapore.
There are several ways to invest in Singapore Government Securities (SGS), including:
It’s important to note that investing in SGS carries a degree of risk, as with any investment. Before investing, it’s always a good idea to consult with a financial advisor to determine if it’s a suitable investment for your needs and to understand the associated risks and benefits.
When comparing Singapore Savings Bonds (SSB) and Singapore Government Securities (SGS), several significant distinctions come to the forefront:
|Singapore Savings Bonds (SSB)||Singapore Government Securities (SGS)|
|1) Interest Rates||3.32% p.a. if held to year 10 (Nov 2023)||Varies|
|2) Interest Payment||Every 6 months||Every 6 months|
|3) Tenure||10 Years|| |
2, 5, 10, 15, 20 or 30 years
|4) Withdrawalbility||Redeem anytime, no penalty|| |
No early redemption allowed
|5) Tradability||No|| |
Tradable through SGX
|6) Minimum Deposit||$500||$1,000|
|7) Maximum Deposit||$200,000||$3,000,000|
|9) CPFIS approved||No||Yes|
These distinctions serve as crucial points for consideration when deciding between SSB and SGS, as they influence factors like accessibility, flexibility, and potential returns.
When it comes to choosing between Singapore Savings Bonds (SSBs) and Singapore Government Securities (SGS), understanding the key differences is essential. These government-issued investment options are backed by the Singapore government, offering security, but they present distinct features that influence your choice.
Understanding Maturity and Interest Rates
One of the first considerations is the maturity period. SSBs offer an extended investment horizon, allowing your investments to mature over a 10-year period. In contrast, SGS bonds come with fixed maturity dates, ranging from 2 to 30 years. Furthermore, SSBs implement a stepped-up interest rate structure, with interest increasing gradually over time. SGS bonds, on the other hand, feature a fixed coupon rate set at the time of issuance.
Another critical difference lies in accessibility. SSBs are exclusively available to retail investors, while SGS bonds cater to both retail and institutional investors, expanding the range of potential investors.
Aligning with Investment Goals
To make the best choice, align your investment objectives with your time horizon. Typically, SSBs suit investors with longer-term horizons and a lower risk tolerance, while SGS bonds may be preferred by those with varying investment horizons and a higher risk appetite.
Exploring Interest Rates and Redemption
Notably, interest rates differ. SSBs offer a stepped-up interest rate structure, meaning a gradual increase over time. In contrast, SGS bonds feature a fixed coupon rate. When it comes to redemption, SSBs offer flexibility, allowing redemption at any point during the year, enhancing liquidity. SGS bonds adhere to a stricter schedule, permitting redemption only at maturity.
Customizing Your Investment
In the world of investing, there is no universal, one-size-fits-all solution. Your investment choice depends on your specific goals and risk tolerance. For example, if you prioritize low-risk investments, Singapore Savings Bonds (SSBs) may be an excellent choice. However, if you are open to embracing higher risk in pursuit of potentially higher returns, Singapore Government Securities (SGS) could be a more appealing option. Ultimately, your investment choices should align with your unique goals and risk tolerance.
In summary, SSBs offer flexibility, while SGS provides stability and the potential for higher returns. It’s important to align your choice with your unique goals and risk tolerance.
For personalized guidance on your investment, consult our licensed financial advisors. Get the information you need to make the right decision!
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