Singapore Savings Bond, Your New Savior?

A quick glance of the Singapore Saving Bond by BT.

SSB-BT

How can you benefit from this new Singapore Saving Bond?

Given that MAS still has not released the full detail for this new upcoming Singapore Saving Bong especially on the limit of funding that you can purchase with. So at this stage, it can be quite hard to formula any strategy in your wealth creation plan.

But in order for me to make any comparison, i will assume the limit of SGD 50k per individual. One big advantage of having this SSB as part of your portfolio will be it having better or similar interest rate with Fixed Deposit but without having to lock in your fund for X amount of time. And but it will be crucial, especially in times of emergency. Having a step up interest rate which mean the interest rate increase from 0.9%(First Year) till 3.3%(Tenth Year), it will be equivalent to an average interest rate of 2.4% over 10 ten years.

For such plan, i will recommend it to my parent or any retired elders. Mainly due to the flexibility in surrendering the SSB at any times and plus the good credit rating for SSB that backup by Singapore Government. Except if the elders are still working (Crediting of salary which is one of criteria for having additional 1% ) and they know how to operate internet banking, then like else, OCBC 360 may be better. Read on why i think OCBC 360 will be better

For working adult, i will think it’s better to have your fund in Saving Account like OCBC 360 (Note : For OCBC 360, interest rate will be reduced from max 3.05% down to 2.05%. And cap at SGD50k. For detail, click here). As a working adult with/without kids, i can easily earn up to 1.55% with OCBC 360, and max of 2.05% if all criteria being meet.

With OCBC 360, i could easily earn 1.55% or max of 2.05% each year, but on another hand for SSB, i can only achieved an average of 2.4% if i stick around for 10 years instead. A different of 0.35%(3.05%-2.4%) if we compare over ten years, whiles it will be 1.15%(2.05%-0.9%)for 1 year. Unless i in SSB for a longer term, else i will be better off with OCBC 360 or other saving account with higher interest rate.

But before making any decision, let wait for further announcement from MAS. For more detail on SSB, click on SSB factsheet for the full detail.