The SSB March 2024 issue of Singapore Savings Bonds by the Monetary Authority of Singapore maintained its gradual downtrend as returns dipped compared to the previous issues.
In this latest issue of SSB, the 1-year returns come in at 2.74% whereas the 10-year average return is now 2.88%.
From now onwards, it seems unlikely that we can get a guaranteed yield of more than 3% for ten years on our SSBs.
On my SSB historical interest rates page (snapshot below), you can see the full history of the Singapore Savings Bonds issues presented in a table format and view the amount of SSBs for each issue that investors have already redeemed.
Singapore Savings Bonds returns reached the respective highs in December 2022 and December 2023 as the momentum of the Fed rate hikes gathered pace.
The attractive yield will have to come down at some point in time, and I am not waiting around to find out.
I have diverted most of my idle funds into SSBs in previous months to pre-emptively lock in a yield of more than 3% for a ten-year duration.
If you are interested in knowing more about Singapore Savings Bonds, check out my articles below.
- Visit the SSB Historical Rates page for data from October 2015 until now
- Learn 37 Things To Become An Expert On Singapore Savings Bonds
- 3 Things About SSBs That Might Interest You
- 1. Recap: What are Singapore Savings Bonds?
- 2. SSB March 2024 Issue Details – SBMAR24 GX24030V
- 3. How Is The Singapore Savings Bonds’ Yield Determined?
- 4. Singapore 10 Years Bond Yield (2024)
- 5. Inverted Yield Curve (2024)
- 6. Consider Redeeming Older SSB Issues With Less Yield For New Ones
- 7. Latest Probabilities Of FOMC Rate Moves
- 8. Higher Short-Term Yield Vs. Locking-In 10 Years Returns
- 9. How To Apply For SSBs Via Internet Banking (DBS/POSB)
- Invest Or Skip This SSB Issue?
1. Recap: What are Singapore Savings Bonds?
Singapore Savings Bonds are safe and flexible bonds for individual investors that allow us to enjoy returns that increase over time and redeem in any month without penalty.
Singapore Savings Bonds are a special type of Singapore Government Securities (SGS) with these features that make them suitable for individual investors:
- Safe → Savings Bonds are backed by the Singapore Government, and they can always be redeemed for the amount invested with no capital losses.
- Long-term → You can invest for up to 10 years and earn interest that increases over time. The longer you hold your bond, the higher your return.
- Flexible → You don’t have to decide at the start how long you want to hold your Savings Bonds. You can get your funds back within a month with no penalty.
- No capital losses → SSBs are non-tradable securities that protect individuals from capital losses.
2. SSB March 2024 Issue Details – SBMAR24 GX24030V
Here are the details on the latest issue of SSB March 2024.
- Amount Offered – S$800 million
- Interest Payment Months – March and September
- Opening Date – 01 Feb 2024 at 6:00 pm (First business day)
- Closing Date – 26 Feb 2024 at 9:00 pm (Fourth last business day)
- Allotment Date – 27 Feb 2024 after 3:00 pm (Third last business day)
- Issue Date – 01 Mar 2024
- Maturity Date – 01 Mar 2034
Yearly interest rates for the March 2024 SSB can be seen here.
3. How Is The Singapore Savings Bonds’ Yield Determined?
Singapore Savings Bonds offer a return that corresponds with how long we hold them.
- By design, we receive less interest at the start, but the amount “steps up” or increases over time.
- The longer we hold our Savings Bonds, the higher our effective return is.
- The interest rates of each Savings Bond issue are based on the average Singapore Government Securities (SGS) yields the month before applications for that issue open.
People have often wondered how the rates are determined. I found the authoritative answer, but I’m not good enough at Maths to understand everything in it.
If you are into the Maths behind SSBs, the official documentation is the authoritative source (MAS) to learn how the Savings Bond’s tenor’s coupon rate for each year is determined. Refer to the formula below.
We need to understand these two things if you are an average Joe like me.
- If you hold your savings bond for the full ten years, your return will match the average 10-year SGS yield the month before you bought the bond. See the next section to learn more. In case you’re wondering, the 10-year SGS yield has hovered between 2% and 3% for most of the past decade.
- The interest rates may be adjusted to maintain the “step-up” feature if market conditions do not allow it – which is our current situation (inverted yield curve).
4. Singapore 10 Years Bond Yield (2024)
As I have mentioned in the previous section, by holding our Singapore Savings Bonds for the full ten years, our returns will match the average 10-year SGS yield the month before we bought the bond.
I have referenced the Singapore 10-Year Government Bond chart above, and you can see how SSB returns have practically mirrored it.
5. Inverted Yield Curve (2024)
It is essential to understand that all else being equal, a bond with a longer maturity will usually pay a higher interest rate than a shorter-term bond since longer-term debt carries greater risk.
A normal yield curve implies stable economic conditions and a normal economic cycle.
An inverted yield curve is rare but suggests a severe economic slowdown.
What we are experiencing right now, whereby short-term bonds are yielding higher than long-term ones, is an anomaly.
Historically, an inverted yield curve is often seen as an indicator of a pending recession.
The official SSB documentation states the following.
There may be certain occasions where the reference SGS yields do not allow a particular Savings Bond issue to have a monotonically increasing step-up interest feature. When this happens, MAS shall lower the coupon rates by the minimum amount necessary to maintain a weakly monotonically increasing step-up coupon schedule.
The reasoning is that the whole intent of Savings Bonds is to encourage long-term savings.
As a result,
- This may cause the average annual compounded return on the particular Savings Bond issue over one, two or five years to be less than the one, two and five-year reference yields.
- Will not affect the issue’s return if held to maturity, which shall always equal the ten-year reference yield (subject to slight differences of up to +/- 0.03% due to rounding in the computation of the step-up coupons).
6. Consider Redeeming Older SSB Issues With Less Yield For New Ones
Don’t forget that you can always recycle your older and lower-yielding tranches for SSBs for newer ones if you happen to be still holding on to less attractive ones.
You can check out all the outstanding (vs. redeemed) SSBs on this MAS webpage.
7. Latest Probabilities Of FOMC Rate Moves
The CME Group FedWatch Tool calculates probabilities of a rate hike by looking at the prices of federal funds futures contracts traded on the Chicago Mercantile Exchange.
These contracts allow people to bet on or protect themselves against changes in the federal funds rate.
This tool collects data on the prices of these contracts and uses that information to estimate the chances of a rate hike.
It calculates the implied probabilities based on how traders are pricing these contracts.
The implied probabilities as of today can be seen in the table above.
I have included snapshots of previous months so that you can easily compare them.
This gives us an idea of how long the short-term yield will continue to stay high.
8. Higher Short-Term Yield Vs. Locking-In 10 Years Returns
Remember the inverted yield curve that we saw earlier? From it, we have a rough idea of where SSB returns are headed compared to short-term cash yield.
Singapore Savings Bonds could be a great option if you want to lock in decent rates for your emergency funds due to their long-term certainty.
If you hope to benefit from the higher yield (3% to 4%) in the short term, you can consider putting your funds into:
- Fullerton SGD Cash Fund (~3.9%)
Benchmark: Singapore Dollar Banks Saving Deposits Rate
- Mari Invest (~3.9%)
Benchmark: MAS Govt Bill Yield 3 Month “MASB3M” Index
Cash fund is a very strict class of investment products that I started using heavily in 2023 in light of the high interest-rate environment.
It is regulated under the MAS Code on Collective Investment Schemes, which states that there are explicit requirements that the names should be appropriate, not undesirable and not misleading.
Cash funds invest primarily in fixed deposits, and they are considered the lowest risk of any investment fund.
To be extra specific, there is a potential loss risk of 0.01% or less in the case of a maximum drawdown.
If you are thinking of investing in the Fullerton Cash Fund, it can be purchased via robo advisors such as Endowus (same low fees as MoneyOwl) or online brokerages such as WeBull (free stocks) or Tiger (S$120 cash).
9. How To Apply For SSBs Via Internet Banking (DBS/POSB)
Applying for Singapore Savings Bonds is effortless and will only take a minute of your time via internet banking.
Below are screenshots of my application process via the POSB website.
Once in a while, I have always experienced a weird bug when trying to do this using the Chrome browser because the Apply button would be missing, but I had no issue when using Firefox.
If you are in the same situation as me, you may wish to disable any ad-blockers because it may interfere with the website.
I thought it might be helpful to point out this issue in case you are encountering the same problem as I did.
Invest Or Skip This SSB Issue?
To recap, you can expect to receive guaranteed returns of more than 2.7% for ten years with a virtually risk-free investment option.
For myself, I have already locked in 6 issues of SSBs with yields of more than 3%, so it is unlikely that I will touch the newer issues.
Will you be deploying any of your money into the latest issue of Singapore Savings Bonds?
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Kevin started Turtle Investor when his net worth languished at negative $25,755. His desire to turn things around led him to build passive income from investments and side hustles that pay for his daily expenses and vacations. You can learn more about Kevin here.