Saturday, 23 March 2019

SSB vs SIA Retail Bond

The pros and cons of the SIA retail bond have been written extensively by many bloggers so I will not be doing that with this post.

Instead I would like to just pen my short thoughts on it.

However before that, following are the yields of the Singapore Savings Bond (SSB) since beginning of last year. Interestingly I was browsing them before I decided to write this post.


Yields of the SSB have been falling since last December. And with the Federal Reserve not expecting further rate hikes this year, I suspect the SSB yield will remain flat for the next few months at least. 

Having said that, if we take the annualised yield of 2.16% based on next month's SSB and compare it against the 3.03% offered by the SIA retail bond, the difference is a 'mere' 0.87%.

I would choose the 'risk-free' SSB over the SIA retail bond anytime.

Firstly it is easier to redeem - pressing of atm and forking out $2.

Secondly it's flexible. 

Thirdly it makes no sense for me to take on more risk for the 0.87% premium.

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