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SSB vs SGS

SSB vs SGS: Which One Suits You More?

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!

 

1. SSB vs SGS: What is Singapore Savings Bonds (SSB)?

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. You can read more about SSB vs SGS below.

How does the SSB work?

The SSB works like a regular savings account, but with a few key differences. Firstly, the interest rates on the SSB are fixed for the life of the bond. This means that you will know exactly how much interest you will earn on your investment upfront. Secondly, the SSB can be held for up to 10 years. This allows you to take a longer-term view on your investments and gives you the potential to earn higher returns.

How do I invest in the SSB?

Investing in the SSB is easy. You can do it through any of the major banks in Singapore.

Investing in the 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.

 

2. What is Singapore Government Securities (SGS) bonds?

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.

How does the SGS works?

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 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.

How do I invest in SGS?

There are several ways to invest in Singapore Government Securities (SGS), including:

  1. Primary market: You can participate in SGS auctions through a Central Depository (CDP) account, and purchase SGS directly from the government.
  2. Secondary market: You can also purchase SGS on the secondary market through a broker or from other investors who already own SGS, but the price may vary depending on supply and demand.

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.

 

3. The differences between SSB vs SGS:

The main difference between SSB vs SGS is that SSB can only be purchased by individual investors while SGS can be purchased by both individual and institutional investors.

Singapore Savings Bonds (SSB) Singapore Government Securities (SGS)
Interest Rates 3.26 per cent p.a. if held to year 10 (Jan’23) Varies
Interest Payment Every 6 months Every 6 months
Tenure 10 Years
2, 5, 10, 15, 20 or 30 years
Withdrawalbility Redeem anytime, no penalty
No early redemption allowed
Tradability No
Tradable through SGX
Minimum Deposit $500 $1,000
Maximum Deposit $200,000 $3,000,000
SRS-approved Yes Yes
CPFIS approved No Yes

SSB vs SGS: The maturity date for SSBs is 10 years from the date of issue, while the maturity date for SGS is based on the bonds tenure from the date of issue.

Another difference between the two is that SSB has a fixed interest rate for the entire duration of the bond while the interest rate for SGS fluctuates with market conditions.

The minimum investment amount for SSBs is $500, while the minimum investment amount for SGS is $1,000.

SSBs can be redeemed early, there is no penalty for doing so. SGS cannot be redeemed earlier than the chosen tenure (but it can be traded on the secondary market – at DBS, OCBC, or UOB branches; or on SGX through securities brokers).

Finally, the SGS can be funded by cash, SRS funds or CPFIS funds, unlike the SSB which only supports cash and SRS but does not support funding by CPFIS funds.

 

4. Which type of investment suits you more – SSB vs SGS?

Both SSBs and SGS are issued by the Singapore Government and are considered to be safe investments, as they are both backed by the full faith and credit of the Singapore government. However, there are some key differences between the two that you should be aware of before making a decision.

For example, SSBs have a longer maturity period, they can be held for up to 10 years, while SGS bonds have a fixed maturity date, varying from 2 to 30 years. Additionally, SSBs offer a stepped-up interest rate, which means that the interest rate increases over time. On the other hand, SGS bonds have a fixed coupon rate that is determined at the time of issuance. SSBs are also only available for retail investors, while SGS bonds are available for both retail and institutional investors. It’s important to consider your investment goals and time horizon before deciding which type of bond to invest in.

Some of the key differences between SSB vs SGS include:

  • Interest rate: SSBs offer a stepped-up interest rate, which means that the interest rate increases over time. On the other hand, SGS bonds have a fixed coupon rate that is determined at the time of issuance.
  • Redemption: SSBs can be redeemed on any month, while SGS bonds can only be redeemed on maturity.

It’s important to consider your investment goals and time horizon before deciding which type of bond to invest in. SSBs are typically recommended for investors with a longer-term investment horizon and a lower risk appetite, while SGS bonds may be more suitable for investors with a varying investment horizon and a higher risk appetite.

When it comes to investing, there is no one-size-fits-all solution. Depending on your investment goals and risk appetite, you may prefer one type of investment over another.

For example, if you are looking for a low-risk investment that offers guaranteed returns, you may want to consider investing in Singapore Savings Bonds (SSBs). On the other hand, if you are willing to take on more risk for the chance of higher returns, you may want to consider investing in Singapore Government Securities (SGS).

 

SSB vs SGS: If you are looking for more flexibility in a bond investment, go for SSB. If you’re looking for stability and a long term investment, go with SGS.

Savings Bonds are a great way to save money and earn interest, but they may not be the best option for everyone. Government Securities are a little more complex investment, but they can offer higher returns.

If you are unsure which investment is right for you, speak to our licensed financial advisor to get more information.
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