Much excitement surrounds the arrival of Singapore Savings Bonds - a flexible, low-cost, fully government-backed investment option which opens for application from Sept 1.
But let's be clear about one thing: These bonds are not for everyone.
Younger, more aggressive and savvy investors may turn up their noses at the interest rates offered. The bonds are set to match the average yield on 10-year Singapore Government Securities (SGS):
2 per cent to 3 per cent a year.
The more ambitious would want their money to work harder for them and may prefer riskier instruments like shares, currencies or commodities.
But there is a great deal of reasons to recommend Singapore Savings Bonds to ordinary investors seeking significantly more than rock-bottom interest rates on bank savings accounts, with zero risk. All you need to start is $500, and one major attraction is that you can get your investment back in any month, with accrued interest, and without any penalty.
The first bonds will be issued on Oct 1, and every month after that for at least five years. Interest on the bonds will be credited every six months and the rate of return will be stepped up each year as an incentive for holders to stay on for the full 10-year term.
Investors can invest up to $50,000 in an issue and hold up to $100,000 of the bonds at a time.
These features put the Singapore Savings Bonds in a unique class, with more appeal than conventional savings accounts, fixed deposits and the long-term, safe SGS. They will fill a significant market gap at the lower end of the risk spectrum for cash investments.
Investors who follow the sound principle of setting aside three to six months of emergency cash can then park these funds in Singapore Savings Bonds for near-emergency and short-term needs, as they are so readily accessible. And for conservative investors with all their savings sitting idle in a bank account, the bonds are most certainly an attractive alternative.
So understand your objectives, do your homework and make an informed choice.