Singapore Savings Bonds impact on FHR based Home Loan

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Common sense will say that FD rate will confirm increase, so FHR based home rate could be not so rosy afterall.

http://www.channelnewsasia.com/news/business/details-on-savings-bonds/1756338.html

SINGAPORE: More details have been released on the proposed Singapore Savings Bonds, a unique and low-risk product for individual investors. The bonds are aimed at providing a long-term savings option for Singaporeans, and as a way to help diversify their investments.

In a news release on Monday (Mar 30), the Monetary Authority of Singapore (MAS) said the Savings Bonds programme - which will only be available for individuals - will be launched in the second half of this year.

Investors can put in a minimum of S$500, and in subsequent multiples of S$500, for 10 years. There will be a limit to the total investment amount so that it can maximise participation and to ensure a broad reach, said MAS.

Investors can opt for a monthly issuance of their money, and they can choose to withdraw all of their money any time, with no penalty. The principal sum and any accrued interest will be paid to them, if they choose to redeem their funds. This means investors need not have to decide upfront on how long they wish to invest.

Mr Vasu Menon, vice president of Wealth Management at OCBC Bank, said: "Relative to Singapore Government securities, the Singapore Savings Bond is very attractive, because it is able to offer the same yield for a similar tenure, without the risk of capital depreciation.

"You enjoy the yield, plus when you get out or redeem within that two-year period, you do not suffer the capital loss. This is a very important feature of the bond, because it offers investors psychological comfort, psychological security and it gives them an avenue to get out whether they lose money or otherwise."

Those in the Savings Bonds programme will earn interest that is linked to long-term Singapore Government Securities (SGS) rates. The Savings Bonds’ interest rates will increase over time. This means the average interest rate will be higher the longer the Savings Bonds are held. The SGS yield for the last 10 years has been between 2 and 3 per cent per annum, said MAS.

Given the way the bond encourages long-term investment with attractive rates, industry watchers added they expect the new Savings Bonds to put pressure on banks' fixed deposits (FDs).

Said Mr David Gerald, president and CEO of the Securities Investors Association (Singapore): "What this Savings Bonds will do immediately is provide competition for FDs. Banks must now start thinking on how to do better.

"They are not doing well, they are providing very little. This will provide a good competition for FDs and I think banks must also encourage their clients to bring this into the investment asset allocation portfolio."

The interest rate schedule for each Savings Bond issue will be announced before the applications open. The interest will be paid every six months.

Furthermore, the Savings Bonds programme is principal-guaranteed, which means investors will always get their investment amount back in full.

The MAS said it will provide information on how to apply for the Savings Bonds programme closer to the launch date.

- CNA/xq/ms

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The Singapore Savings Bonds which are slated to be launched in the second half of 2015 have created an air of excitement for investors.
If you are new to the whole concept of Singapore Savings Bonds, click on "Continue Reading" for a compilation of articles on the Singapore Savings Bonds.
Read through them for a better idea of what to expect from the Singapore Savings Bonds and how you can utilise them to boost your investment portfolio.
"New Bonds Old Comforts" - by Business Times
Business Times provided a great infographic which gives an overview of the features of the Singapore Savings Bonds in comparison to the existing Fixed Deposits and Singapore Government Securities. See the infographic at: http://www.businesstimes.com.sg/info…/new-bonds-old-comforts
"All You Need To Know About The Singapore Savings Bonds" by Dr Wealth
Dr Wealth wrote a rather complete summary of what you need to know about the Singapore Savings Bonds. If you have just heard about it, read Dr Wealth's article for an overview of what the Singapore Savings Bonds are about here: https://www.drwealth.com/…/all-you-need-to-know-about-the-…/
"Singapore Savings Bonds - Why They Are Almost Alike To Your Friendly Fixed Deposits" - by BigFatPurse
We compared the Singapore Savings Bonds to Fixed Deposits in this article that will give new investors a clearer picture of how the Singapore Savings Bonds work in comparison to the Fixed Deposits that most are familiar with. Find out here: http://www.bigfatpurse.com/2015/05/singapore-savings-bonds/
“Singapore Savings Bond - A Risk Free Investment Option” – Sugar, Spice, Everything, Nice
Another great summary on the features of the Singapore Savings Bonds. Sugar, Spice, Everything Nice has suggested that these bonds may be useful for less savvy investors. Read it here: http://sugaspiceeverythingnice.blogspot.sg/…/singapore-savi…
"Singapore Savings Bonds: What Fixed Deposits Need To Do To Up Their Game" - by MoneySmart
MoneySmart points out the advantages that the Singapore Savings Bonds had over Fixed Deposits. They went on to suggest 3 ways the Fixed Deposits should consider in order to continue attracting consumers. Learn the advantages that the Singapore Savings Bonds provide here: http://blog.moneysmart.sg/…/singapore-savings-bonds-what-f…/
"What Pitch Perfect 2 Taught Me About The Singapore Savings Bonds" - by Cheerful Egg
Cheerful Egg reminds us to keep a clear head and to understand what the Singapore Savings Bonds are actually used for. He mentions that the Singapore Savings Bonds should be viewed as a vehicle for saving rather than for investing. And that we should keep the big picture in mind and determine the role that the Singapore Savings Bonds should play in our investment portfolio. Read it here: http://www.cheerfulegg.com/…/what-pitch-perfect-2-taught-m…/
“Late Night Thoughts on Singapore Savings Bonds” – The Turtle Investor
The Turtle Investor gave his view on the need for the Singapore Savings Bonds and a tip on how investors can consider using these bonds in their Permanent Portfolio. Read it here:
http://www.turtleinvestor.net/thoughts-on-singapore-saving…/
“Singapore Savings Bond – Good or Not?” – AK
AK delves into why the Singapore Savings Bonds is NOT for him and a few considerations one must make before making the Singapore Savings Bonds a part of your portfolio.Read it here: http://www.sharesinv.com/…/singapore-savings-bond-part-4-g…/
"Singapore Savings Bonds' Inflation Protection Abilities" - by Investment Moats
Investment Moats examined the possible returns from the Singapore Savings Bonds in the event that interest rates fluctuated, providing an interesting angle to the use of the Singapore Savings Bonds. Learn how you may be able to get greater returns on Singapore Saving Bonds here: http://www.investmentmoats.com/…/singapore-savings-bonds-i…/
"Singapore Savings Bonds: A.K.A. LKY Bonds?" - by My15HourWorkWeek
My15HourWorkWeek provided his likely plan of action which contained a bond buying strategy that readers may find useful. Find out here: http://www.my15hourworkweek.com/…/singapore-savings-bonds-…/
"Analysis of Singapore Savings Bonds" by Wilfred Ling
Using financial formulas, Wilfred Ling suggested possible rates of returns of the Singapore Savings Bonds in comparison with the Singapore Government Securities. Find out the difference in returns here: http://www.ifa.sg/analysis-of-singapore-saving-bonds/
We hope that by reading the views of different financial investors, organisations and bloggers, you would be able to gain a clearer picture of what the Singapore Savings Bonds are about and how you too can use it to enhance your investment portfolio or retirement funds.