Three things to note for Feb 2019 Singapore Savings Bond

I seldom write about the Singapore Saving Bond (SSB). But I am surprise by the yield of the February 2019 tranche of SSB. Hence, this post.

Depending on your time horizon, you should watch out for the following:

1. The first year yield is 1.98%. This is still relatively attractive as it is better than putting your money in a 1 year fixed deposit or even parking your money in the bank.
2. The first three years’ yield are the same at 1.98%. I had to triple check as this is the first time there is no increase in yield on a year to year basis. Typically, the feature of SSB rewards Singaporeans who hold on to the SSB for a longer period of time by stepping up the interest rate each year.
3. The 10 years average yield of 2.20% is the lowest since April 2018. March 2018 tranche’s 10 years average yield was 2.11%.

What caught me by surprise was points 2 and 3 in the para above. 

You would also notice that the gap between the first year yield and 10 years yield is smaller. This is something to take note if you intend to put your money in SSB for a long period of time.

If your time horizon is short (e.g. 1 year), the first year yield is still attractive. Moreover, SSB allows early redemption with a small application fee of $2 and accrued interest will be paid!

As stated in my previous post, I will continue to put in a small portion of my emergency funds into SSB for a year period since it beats putting them into a saving account and SSB is more fluid than fixed deposit.