The Complete Guide To Singapore Savings Bond (SSB) — Return Rates And How It Works

Need a relatively risk-free investment vehicle to park your money? Singapore Savings Bonds (SSBs) can make a safe and stable investment. Here’s all you need to know about its returns, features, and benefits.

With all the talk about investing going on, parking your savings into a savings account is no longer enough if you're planning for retirement. Coupled with the increasing costs of living and inflation rates, most would agree that you cannot afford not to invest.

Are Singapore Savings Bonds the right investment vehicle for you? Not only is it virtually risk-free, it is also very flexible and requires minimum capital to start. With a 10-year holding period, it might be a good complement to your overall investment portfolio. But if you compare it with other investment vehicles, the returns are significantly lesser. 

So what exactly are SSBs, and how do they work?

What is a Singapore Savings Bond (SSB)?

Singapore Savings Bonds (SSBs) is an investment product offered to individual investors as a way to grow their money. SSBs are a type of Singapore Government Securities and are issued and guaranteed by the Government of Singapore. Since they are a type of ‘bond’, you’re essentially lending money to the Singapore government.

As an investment, SSBs have the following features:

• Low risk (backed by the Singapore Government) 
• Low returns (compared to other investments such as stocks and funds)
• High liquidity (can withdraw investments at any point in time)
• Limited investment amount (capped at S$200,000 per individual)
• Pay out step-up interest (increasing each year until Year 10)
• Non-transferrable (cannot be traded or pledged as collateral)

The minimum amount to invest in is S$500, up to a maximum of S$200,000 in SSBs, but do note that the investment sum should be in multiples of S$500. This maximum refers to the total amount of SSBs you have on hand at any one time.

How do SSBs work?

Each month, a new Savings Bond will be issued every month and has a term of up to ten years. The longer you hold out, the greater the interest you earn as the interest rates “step up” each year. At issuance, the interest rates for the entire 10-year term are fixed and locked in.

You can redeem your Savings Bonds at any month, and will not be charged any penalty for exiting the investment prematurely. 

The interest will be paid to you every six months after issuance and acts a little similar to dividend investing. If you’ve put in cash, the interest earned will be automatically transferred into the bank account that is linked to your individual CDP Securities account. If you’re investing with your SRS funds, the interest will be transferred into your SRS account.

Earn more by investing in one of the brokerage accounts by comparing the fees and rates.

SSB September 2024 interest rates

New SSBs are offered every month, and the interest rate is different each time. Here’s a look at Septmber's tranche and projected 10-year returns. Do note that the earlier you withdraw your money, the lower the interest rate applied to your balance sum.

Here are the details of the upcoming SSB tranche in  September 2024:  

Here's the 10-year average return and interest rates for the July 2024 tranche:

If you’re interested in applying for the upcoming September 2024 tranche, here are some dates you should take note of:

• Opening date: 1 Aug 2024
• Closing date: 27 Aug 2024
• Issurance: 2 Sept 2024

Here’s a breakdown of the returns for the past tranches.

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Pros and cons of Singapore Savings Bonds

#1 Generally very stable

For SSBs, the underlying assets are Singapore Government Securities – this essentially means that you’re lending money to the Singapore Government, which has a track record of healthy budget balances year after year. The Government of Singapore also holds the highest ‘AAA’ credit rating from international credit rating agencies. As such, barring extreme scenarios, it is highly unlikely that the Singapore Government would not be able to repay the debt. 

Also, government bonds are generally considered safe because, at the very worst, the government can always print more money to repay the debt upon maturity. 

And if you need further peace of mind, SSBs pay out dividends every six months, which can give you the reassurance that your money is growing. 

#2 No penalty for early redemption

As with other investment vehicles like endowment plans and fixed deposits, they usually charge a fee if you wish to take out your money prematurely. But with Singapore Savings Bonds, you’re free to exit the investment at any time with no penalty. When you start the investment, you are also not required to decide on a specific investment period.

This means that SSBs give you sufficient flexibility to decide how long you want to invest. If you need any emergency cash for unforeseen circumstances, you can always take out the funds that you have without having to pay.

#3 Low minimum amount

SSBs also don’t require large capital for you to get started. With as little as just S$500, you are free whatever amount you want, based on your financial situation. Of course, the higher the capital, the higher the returns, though the capital doesn’t affect the interest that you’ll receive.

This means that basically anyone can get their hands on a Savings Bond, and it also gives you the freedom to decide how much you’re willing to set aside, without requiring a high capital that would take away a bigger proportion of your savings or disposable income.

Cons of Singapore Savings Bonds

#1 Relatively low-interest return

Compared to other investment vehicles like stocks, ETFs or robo-advisors, the returns that you’ll get from SSBs are definitely less, as their interest ranges from 1% to 3%. So if you’re looking for higher yields, you can look elsewhere.

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Who is eligible to apply for an SSB?

Singaporeans, Permanent Residents (PRs) or foreigners who are aged 18 and above are eligible to apply for an SSB. However, you will just have to have a bank account with one of the three local banks (DBS, OCBC and UOB) and an individual CDP Securities account.

How do I apply for an SSB?

If you want to buy an SSB, you’ll have to apply through DBS/POSB, OCBC or UOB ATMs or internet banking, or OCBC’s marble application. For SRS investors, you can apply through your respective SRS Operator’s internet banking portal. You cannot apply for SSBs in person at the bank.

The allotment results will be announced on the third last business day of the month. If you’re successful, you will be notified by the CDP by mail while SRS investors will be notified by the SRS operator. 

If you’re unsuccessful or have an incomplete application, any excess money will be automatically refunded by the end of the second-last business day of the month.

How do I redeem my SSB?

When your SSB matures after a decade from its issuance date, your principal and interest payment will be credited to your participating bank account (not your CDP account) via Direct Crediting Service (DCS). If you had used your SRS funds, the payout will be made to your SRS account.

In case you want to redeem your principal and interest income before the SSB matures, you have to submit your redemption requests through the ATMs or ibanking portals of your participating bank. A S$2 transaction fee will apply for each redemption request.

Redemption requests for SSB purchased with SRS funds can only be made through the ibanking portal of your SRS operator (DBS/POSB, OCBC, or UOB). A similar S$2 fee will apply.

Earn more by investing in one of the brokerage accounts by comparing the fees and rates.

Singapore Savings Bonds vs fixed deposits

Fixed deposits and Singapore Savings Bonds are generally very similar — they both involve pledging a fixed amount of cash for a fixed amount of time to earn a reliable interest rate, and they are both considered low-risk investments.

However, the maximum amount you can invest for SSBs is only S$200,000, meaning that there is also a cap on the maximum amount you can earn. As for fixed deposits, you can invest as much as you want. If you’re planning on investing a huge amount of money with the bank, you might even get a higher-than-advertised interest rate.

Fixed deposits also usually allow you to withdraw the money immediately, while SSB withdrawals can take up to a month. However, fixed deposits sometimes charge a fee or return any interest paid when you withdraw prematurely and may deem you ineligible for any interest accrued. As for SSBs, early withdrawals do not result in any penalty.

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Who should invest in Singapore Savings Bonds?

With such low returns, does this mean SSBs are a bad investment? Well, not necessarily.  

In a properly designed portfolio, bonds (like other investments) have a role to play. SSBs, in particular, are virtually risk-free and highly liquid, two factors that make them ideal if you’re seeking to park your money. 

This need usually arises the closer you get to retirement, as you’ll need to ensure your cash is easily available, with the amount staying more or less the same. 

A quick lesson on financial planning: generally speaking, an investment portfolio should focus on growing your money when you are young and possess earning power, gradually switching focus to preserving your wealth as you get closer to retirement and the loss of earning power. 

It would be a bad idea to invest in something risky near retirement. A loss would jeopardise your ability to retire well. As SSBs are low-risk, low-return instruments, investors are more likely to increase their investments in them the older they get.

If you’re interested in other Singapore-related investment tools, you can also consider T-bills and SGS bonds.