'Boring' bonds perking investors' interest

ST ILLUSTRATION: ADAM LEE

In the first of a two-part series, The Sunday Times highlights what you should know about Singapore Savings Bonds.

Risk-free, flexible, affordable and low-cost - that just about sums up the Singapore Savings Bonds that open for applications next month.

The bonds are a unique option that will help fill a gap in the otherwise "boring" investment segment that deals with low risk and low returns. Not surprisingly, the first issue of these bonds in October has created some excitement among retail investors who want a safe savings option and have the ability to invest for a longer duration. They see this as a suitable tool to achieve higher returns than what they are getting on their savings accounts and some fixed deposits.

There will be ample chances to apply for the bonds as a new issue will be available each month for at least five years. So investors are advised not to rush for the first issuance when applications open on Sept 1. After all, the Government plans to issue between $2 billion and $4 billion of such bonds this year.

The programme is part of a set of initiatives by the authorities to improve the availability of simple, low-cost investment products to retail investors. They will complement the Central Provident Fund system and other savings and investment options already available, such as deposits, unit trusts and endowment insurance plans, offering more choices to individuals.

Access to exchange-traded funds has also improved and the Monetary Authority of Singapore is working with the Singapore Exchange to introduce frameworks that will make it easier for qualifying issuers to issue retail bonds, a product which has found favour among investors.

What to do with that cash

Singapore Savings Bonds: What you need to know

A version of this article appeared in the print edition of The Sunday Times on August 02, 2015, with the headline ''Boring' bonds perking investors' interest'. Print Edition | Subscribe