Thursday, September 13, 2018

One decent reason to get Singapore Savings Bond

Now, as many travelling on the mrt has seen, there is the presence of Singapore Savings Bonds advertisements being tossed out around. This got me interested on the topic of whether it was worth it to bid on them. The interests rates are as shown below.













Source: http://www.sgs.gov.sg/savingsbonds/Your-SSB/This-months-bond.aspx

At first glance, of course, the returns are barely enough to cover the average inflation rate of Singapore. Nevertheless, this is a risk-free investment, and can be ideal to use your rainy day funds/savings and invest it in the manner I will explain below.

DBS multiplier comes straight to mind as a great way to combine the returns from both sides (DBS and SSB) . What am i talking about here?

As some may know, DBS Multiplier gets higher interest rates the more categories of transactions one does , namely your salary entering through the account, house loans from DBS/POSB, insurance payments from DBS/POSB, credit card usage ($1 is sufficient to trigger the category) and most importantly, if you INVEST through DBS/POSB.

Let's assume you want the most bang for your buck. Naturally, I would say sticking to SC (refer to previous posts) for investing might still be a good choice to a certain extent, as I believe the transaction costs are still the lowest there.

However, if you wish for a double-pronged method for investing, one can actually "trigger" another category for DBS multiplier by actually obtaining the SSB from the CDP account if one has one with DBS/POSB. In essence, you will be obtaining the interest for buying the SSB bond, while still triggering a higher return for your DBS multiplier. I think that is a win win, especially considering how relatively liquid retrieving this money from SSB/DBS multiplier can be. Meanwhile, I can still be obtaining the sweet low cost investing from Standard Chartered too.

Cheers people, and onwards to investing towards a brighte future.

Disclaimer: I am not associated with any of the banks, nor am I associated with the Singapore Government in anyway (other than paying them taxes. Boo.)

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