Why bother investing in Singapore Savings Bonds, when T-bills offer higher yields?

We finally answer one of the most asked questions of 2022.

Over the past few months, we’ve posted each time the newest tranche of Singapore Savings Bonds are dropped online. Latest one here.

Without fail, someone always asks: Why bother about SSB, since T-bills offer higher yields, and are also very safe investments? 

Here’s the short answer:

It’s a bit of a misplaced comparison.

Here’s the long answer: 

There is absolutely nothing wrong with T-bills. They’re a great way to earn a fixed interest over the course of six months or one year. 

The most recent cut-off yield for the 6-month T-bill was at 4.28% p.a.

The 10-year average yield for the next Singapore Savings bonds is at ~2.97% p.a (The previous 10-year average yield was 3.47% p.a). Check out the historical rates here.

So why invest in Singapore Savings Bonds then? 

Well, the answer is quite simple – it has to deal with the tenure of the investment.

Singapore Saving Bonds guarantees its rates for 10 years. The T-bills go up to 1 year, max.

Suppose the interest rates go back down in 2024 or 2025, the T-bills investor may not be able to secure attractive interest rates.

However, the SSB investor will still get their 2022 rates, all the way till 2032.

This also applies to things like Fixed Deposits, or even banks’ High Yield Savings Accounts (which can change without warning).

In some way, the SSB investor picks certainty, while forgoing higher yield. Is that a bad decision? We don’t necessarily think so.

It all depends on your investment needs, horizon and philosophy.

Remember – fixating on ‘highest returns’ is a rookie mistake: There are many other considerations when making an investment! 

Stay woke, salaryman