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    Singapore Savings Bonds Factsheet: Key Features

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    devmohn
    The Singapore Savings Bonds Factsheet outlines a new government bond being introduced to provide Singapore residents with a safe, long-term savings option. Key features include principal being guaranteed, interest rates that step-up over 10 years to match 10-year SGS yields, and the ability to redeem the bond flexibly within a month with no penalty. Savings Bonds pay interest every 6 months and aim to offer average annual returns of 2-3% for 10-year holdings, diversifying investments and saving for retirement. They differ from conventional bonds in having no price risk and interest that increases over time. The bonds will be available in the second half of 2015.

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    Singapore Savings Bonds Factsheet: Key Features

    Uploaded by

    devmohn
    44 views2 pages
    The Singapore Savings Bonds Factsheet outlines a new government bond being introduced to provide Singapore residents with a safe, long-term savings option. Key features include principal being guaranteed, interest rates that step-up over 10 years to match 10-year SGS yields, and the ability to redeem the bond flexibly within a month with no penalty. Savings Bonds pay interest every 6 months and aim to offer average annual returns of 2-3% for 10-year holdings, diversifying investments and saving for retirement. They differ from conventional bonds in having no price risk and interest that increases over time. The bonds will be available in the second half of 2015.

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    FactSheetSavingsBonds.PDF

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    The Singapore Savings Bonds Factsheet outlines a new government bond being introduced to provide Singapore residents with a safe, long-term savings option. Key features include principal being guaranteed, interest rates that step-up over 10 years to match 10-year SGS yields, and the ability to redeem the bond flexibly within a month with no penalty. Savings Bonds pay interest every 6 months and aim to offer average annual returns of 2-3% for 10-year holdings, diversifying investments and saving for retirement. They differ from conventional bonds in having no price risk and interest that increases over time. The bonds will be available in the second half of 2015.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    44 views2 pages

    Singapore Savings Bonds Factsheet: Key Features

    Uploaded by

    devmohn
    The Singapore Savings Bonds Factsheet outlines a new government bond being introduced to provide Singapore residents with a safe, long-term savings option. Key features include principal being guaranteed, interest rates that step-up over 10 years to match 10-year SGS yields, and the ability to redeem the bond flexibly within a month with no penalty. Savings Bonds pay interest every 6 months and aim to offer average annual returns of 2-3% for 10-year holdings, diversifying investments and saving for retirement. They differ from conventional bonds in having no price risk and interest that increases over time. The bonds will be available in the second half of 2015.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    Singapore Savings Bonds Factsheet

    Key features Why is the Government introducing Savings Bonds?


     To provide individuals with a long-term savings option
    Principal guaranteed
    that offers safe returns.
    You will always get your
    investment amount back in What are its features?
    full - no capital losses.
    Feature Details
    Invest for the long-term Eligibility  Individuals only
    You can invest for up to 10 Term  10 years
    years and earn interest Interest  Paid every 6 months
    that “step-up” or increases  At issuance, rates are fixed based on
    over time. The longer you the prevailing SGS yields and locked in
    hold your bond, the higher for each issue
    your return. Issuance  Monthly
    Redemption  Monthly, with no penalty
    Flexible redemption  Principal and any accrued interest will
    You don’t have to decide be paid
    upfront how long you want Investment  Minimum of $500, and subsequent
    amount multiples of $500 up to a cap to be
    to be invested. Get your
    announced
    funds back within a month,
    Non-  Savings Bonds are non-marketable
    with no penalty. tradable securities and cannot be bought or
    sold in the secondary market

    How much return can I get?


    How can you benefit?
     If you hold your Savings Bond for the full 10-year term,
    Saving for retirement the average interest per year on your investment will
    Savings Bonds are a safe match the return if you had invested in a 10-year SGS
    and flexible option to at the point of your investment. In the last 10 years,
    maintain the value of your the 10-year SGS yield has been between 2% to 3%
    nest egg. most of the time.
     If you decide to redeem your Savings Bond early, the
    Setting money aside for average interest per year will be lower than the 10-
    “rainy days” year SGS yield. For example, if you redeem it after 2
    You can earn step-up years, the average interest per year on your
    interest on your savings investment will match the return if you had invested in
    until you need the money. a 2-year SGS.
     The interest rate schedule for each Savings Bond issue
    Diversifying your will be announced before applications open.
    investments
    Savings Bonds can help you How long can I invest in Savings Bonds?
    diversify risks and achieve
    an efficient portfolio.  Savings Bonds have a term of 10 years, but you can
    redeem them before that with no penalty.

    1
    How are Savings Bonds different from conventional SGS?
     No price risk: Conventional SGS are tradable and their prices can change, depending on
    global and domestic interest rates movements and financial market conditions. Hence
    for SGS, you may receive more or less than your invested capital if you sell your SGS
    before maturity. But you will always get your principal back in full when investing in
    Savings Bonds.
     Step-up interest: Conventional SGS pay the same interest rate each year. Savings
    Bonds will pay interest that increases over time to give you an average interest rate
    that is linked to SGS yields.

    How does the step-up interest work?


    (Figures are for illustrative purposes only)

     Let’s say you bought a Savings Bond with the following interest payment schedule.

    Illustration of step-up interest payments

     In the first year, you will earn interest based on the 1-year SGS yield at the point you
    bought the bond (0.9% p.a.).
     In the second year, you will earn an interest (1.5% p.a.) higher than the 2-year SGS
    yield (1.2% p.a.), so that on average over the two years you would have received the 2-
    year SGS yield.
     In the tenth year, the Savings Bond will pay an interest of 3.3% p.a.. The total return or
    average interest on your investment (2.4% p.a.) will match what you would have
    received had you bought a 10-year SGS at the time of your investment.
     At any time during this 10-year period, you can choose to redeem the bond with no
    penalty and receive your principal ($1,000) with accrued interest. If you hold the bond
    for the full 10 years, you will get your principal back together with the final 6-monthly
    interest payment.

    When can I start buying Savings Bonds?


     Savings Bonds will be launched in the second half of 2015. We will provide
    information on how to apply for Savings Bonds closer to the launch date.

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