The latest SSB for April 2023 has been announced with a 10-year average yield of 3.15%, an increase from last month’s SSB offering 2.9%. The first year yield is 3.01%.
This is the 4th highest yielding SSB in recent times, just behind Dec 2022 (3.47%), Jan 2023 (3.26%), and Nov 2022 (3.21%) tranches. First year yield is also relatively high, and the yield stays pretty flat for the duration of the bond. Definitely looks pretty attractive to me.
If you’re looking for places to park your cash or SRS funds for the long term but still want the option to terminate early without penalty, SSB could be a good option. Unfortunately, SSB is not eligible for CPFIS scheme so you can’t invest your CPF savings into it.
For more details, refer to my Singapore Savings Bond (SSB) tracker.
Alternatives offering higher yields
Treasury bills or T-bills, fixed deposits, and even some bank savings accounts offer higher yields than SSB at the moment. Most cash funds and short-term bonds now offer around 4% yield. However, these are all shorter tenure products whereas SSB is more a longer term product with a tenure of 10 years.
T-bill yields have been back in an uptrend, and the last auction on 2nd Mar 2023 for 6-month T-bills had cut-off yield of 3.98%.
According to Seedly, fixed deposits are offering up to 4.00% (offered by HSBC for a min placement of $30k for 7 months).
As for cash funds, MoneyOwl WiseSaver is offering 3.94% 5-day MA yield, but this is only an indicative rate and may fluctuate anytime. You can sign up using my link if you’re interested.
Bank savings accounts are also offering very attractive yields but require you to jump through hoops to get there. For instance, Standard Chartered has recently increased this interest rate on Bonus$aver account, depending on which criteria you fulfil.
Why SSB might still be worth applying for
In my opinion, the main attraction of SSB is the long tenure while having the flexibility to redeem early without penalty. You’d also still be entitled to accrued interest upon redemption. So if interest rates continue to rise, you have the option of redeeming earlier bonds and applying for the latest issuance with higher interest rates.
In contrast, if you’re mostly in T-bills or fixed deposits which usually have short tenures and interest rates start to reverse back downwards, you might not be able to find similar high yields when your T-bill or fixed deposit matures.
My thoughts
I think it’s worth waiting for higher yields if you have limited capital. Alternatively, you can split the cash you want to put into SSB into 2 pots: one for applying this round and another reserved for rolling over SSBs if rates continue to rise.
For the 2nd pot, you can consider putting it into cash funds like MoneyOwl WiseSaver or high-yield savings accounts like SCB Bonus$aver while you wait for higher yields.
With sticky inflation, expectations for the Fed to pause hiking has abated. Some are even expecting a higher terminal rate than the 5.1% that the Fed guided for. With the situation so fluid, I think it’s best to have a mix of longer term SSB and shorter term FD, T-bills, cash funds, or even high-yield savings accounts.
Since late Jan 2023, 10Y SGS bond yields have rising. Until we start to see inflation easing within or below expectations again, rates might continue to rise. If the 10Y SGS bond continues to be around the current ~3.4%, we might possibly see next month’s bond yield come close to its recent peak of 3.47% hit in Dec 2022.
Am I applying this round?
I was away on vacation for the latter half of Feb, so I forgot to redeem the $13k of Sep 2022 SSB. So this month, I’ll definitely be redeeming that tranche. Since SSB yield is above 3%, I’ll likely apply for the equivalent $13k for this month’s offering.
Will you be applying for this month’s SSB?
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Disclaimer: This is not financial advice. I am not professional financial advisor nor do I work in the finance industry. Anything I write here is purely my personal opinion. Please do your own research and due diligence before investing into anything. All investments come with associated risks. Best to consult a financial advisor if you’re still unsure.
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