“Do not save what is left after spending, but spend what is left after saving,” as the famous quote by Warren Buffet goes. You can improve your financial security by controlling your finances and investing in securities.
Smart investing necessitates a financial strategy, understanding your risk tolerance, and beginning with sensible investments. Have an excellent investing strategy if you want to have good returns.
If you are new to investments and want to minimise and earn consistent returns, you can invest in Singapore Savings Bonds or SSBs. You can also build a diverse portfolio using these assets and generate a steady stream of interest income.
Know What Singapore Savings Bonds Are
Singapore Savings Bonds are a type of financial instrument that allows individual investors to increase their money. SSBs are Singapore Government Securities, offering a long-term savings option with guaranteed returns. Through these bonds, you are effectively lending money to the Singapore government.
Some Features of SSBs
Singapore Savings Bonds function similarly to a usual savings plan or fixed deposit with a bank. An investor is raising capital or investing money for the Government of Singapore in exchange for an interest coupon on the main investment amount.
According to the Monetary Authority of Singapore (MAS), saving bonds are issued for investment rather than using them for expenditure. The SSB is often regarded as a tool for investors seeking to safeguard their capital by investing in lower-risk assets. Some of their features are:
- Long-Term Investment
SSB has a long maturity duration, say 10 years, which is a rather long investment plan. The returns on SSBs are higher because they are held for a longer time, which leads to an increase in the interest rate.
- Carry Low-Risk
Investors are confident of not incurring any capital loss and getting the full amount of money invested since SSBs are supported by the Singapore government. They are generally secured investment options with a low chance of credit default.
- Investment Flexibility
SSB permits investors to withdraw their investments at any moment without penalty. As a result, investors do not need to prepare an investment time period with SSB. This is in contrast to most ordinary deposit savings programmes offered by banks, which charge a penalty for early withdrawal.
- Use SRS or Cash to Buy SSBs
You may buy these bonds using SRS money or cash.
SSBs are non-transferable, meaning they cannot be exchanged or pledged as collateral.
- Earn Regular Interest
You are paid interest regularly after 6 months.
Advantages of Investing in SSBs
Savings bonds are a safe method to create wealth for the long term, which complements your other investments and savings.
- Offer diversification and Preservation of Capital
Investors can ensure that SSBs offer regular returns quarterly or monthly, and they are regarded as a low-risk investment. Furthermore, they have the option of determining the time duration for their investments.
Fixed income is an excellent way to diversify your portfolio. Stock markets are extremely vulnerable to economic downturns, market volatility, and geopolitical crises, making the return on investment in shares uncertain.
- Low Minimum Investment Amount
SSBs also do not necessitate a substantial initial investment. You are free to spend whatever amount you desire with as little as 500 SGD, depending on your financial position. Of course, the more capital, the greater the returns, albeit the capital has no bearing on the return you will earn.
This means that almost everyone can obtain a Savings Bond, and it also allows you to select how much you want to save aside without requiring a large capital investment that may deplete a larger percentage of your savings.
- An Asset that generates income
A regular-income asset can be a reliable income source since it has a planned dividend delivery at regular periods. A fixed income instrument is ideal for a retirement portfolio since the maturity date, when the main investment amount may be collected, as well as regular distributions for monthly costs can be chosen.