If you want to grow your money, Singapore bonds are one of the best options for investment. It is a product offered to individual investors who want to invest and earn a fixed return. A bond is a type of borrowing issued by companies and governments. The main objective of issuing bonds is to generate money or borrow money from investors. When you invest in bonds, you are funding money to the issuer for a period of time.
Singapore bonds are a type of Singapore Government Securities guaranteed by the Government of Singapore. The bonds give a higher return when compared to fixed deposit accounts. The SSBs are backed by top companies in Singapore and the government of Singapore, where the investors can enjoy high credit ratings from top companies. You can invest SSBs from as low as SGD 500.
Generally, SSBs are issued with a maturity period of 10 years; however, the investors can close their bonds anytime without any penalties. Unlike that in corporate bonds, the investors of SSBs have no right to sell their bonds to another party. Instead, they can redeem them from the Government of Singapore.
Here are some types of Singapore bonds you can invest in:
Bond ETFs – SGX Traded
Available in board lots of 100 units, the ETFs provide varied investment options in Singapore government and Asian corporate bonds. The investors have the privilege to invest in a Singapore bond ETF through a regular savings plan.
You can invest in different segments such as government bonds, corporate bonds, high yield bonds, and investment-grade corporate bonds through Unit Trust bonds and access a range of unit trusts. You can buy unit trusts from SGD 100 to a lump sum of SGD 1,000 under the savings plan. By having a 40 to 50 stock portfolio, the Unit Trust bonds reduce the risk of dangers.
Retail Bonds – Traded On SGX
With a minimum trade size of 1000 units, the retail bonds are sold in ‘board lots’. The investors can buy a dozen bonds sold through SGX. The investors can purchase or sell at prices available on the SGX website.
How Do SSBs Work?
A new SSB will be distributed every month with a maturity period of 10 years. You will get more profit and can grow the money based on the period you hold the bond. The longer you have the bonds, the higher you earn. The interest rate up to the maturity period is fixed when issuing the bond. However, you can redeem or close the bond anytime without any additional charges or penalties.
After the issue, you will get the interest every six months, similar to a dividend on the bonds. The interest you earn will be transferred to the linked account, such as a Savings Account, Individual CDP Securities Account, or SRS funds, based on the account type you hold.
However, you need to consider a few aspects when investing in bonds, and they include:
- Understand terms and conditions
- Evaluate the impact on the overall investment portfolio
- Check if your financial resources are sufficient
- Consider all the risks of investing
- Monitor or evaluate changes in economic or other factors
SSBs or Singapore Bonds are attractive investment options for those looking for a regular income or diversifying their investment portfolio.