Savings bonds present retail investors with a principal-guaranteed, flexible, affordable and long-term savings choice.

Asset classes come with varying potential risk levels and savings bonds offer one of the lowest risk levels around, as well as a relatively low return too.

Last Sunday, we compared these bonds with fixed deposits and Singapore Government Securities (SGS). We also explained how the step-up interest payment works, so the longer investors hold their bonds, the higher their returns.

Q How do I apply?

A Applications for the maiden issuance open at 6pm on Sept 1 and close on Sept 25. After the opening day, applications can be submitted from 7am to 9pm, Mondays to Saturdays, excluding public holidays.

Apply at DBS/POSB, OCBC or UOB ATMs, or via DBS/POSB Internet banking. You cannot apply at bank counters in person.

You can make multiple applications through either the same bank or a different one. There is a $2 non-refundable fee for each application. The money will be deducted from your account when you apply.

But before you apply, you need to open an individual Central Depository (CDP) securities account if you do not already have one, and link it to your bank account by applying for direct crediting service (DCS) at the same time. You need to be at least 18 years old to open an individual CDP securities account.

CDP is the custodian for these savings bonds; DCS is a service provided by CDP that allows it to automatically credit the savings bonds interest payments and redemptions to investors' bank accounts.

To open an individual CDP securities account, investors can download the application form at www.sgx.com/cdp/faq and mail the completed form to CDP.

Another option is to visit the CDP Customer Service Centre or a retail broker in person.

You can refer to the guide at www.sgx.com/savingsbonds/cdp

The application for a new CDP account with DCS will take about 10 business days to process.

Q What about the elderly and disabled?

A As CDP account opening applications can be submitted by mail, there is no need for the elderly and disabled to visit the CDP to submit the application.

If they require a form, they can call CDP (6535-7511) to ask for one to be sent through the post.

Help is also available for them to fill in the application form.

Bank staff are also ready to assist the elderly and disabled who have difficulties applying for Singapore Savings Bonds at ATMs at the various bank branches.

Q What happens if I redeem my savings bonds early?

A When you invest in Singapore Savings Bonds, you will always get your principal back - whether on maturity or should you opt to redeem them early.

This makes investing in these bonds more attractive than conventional SGS which are tradeable and, as such, their prices can change, depending on the financial market conditions and interest rate movements. It is possible to receive more or less than your principal if you sell your SGS before maturity.

You can redeem your savings bonds in any month before they mature with no penalty by submitting your requests through DBS/POSB, OCBC or UOB ATMs or through DBS/POSB's Internet banking portal. The redemption period opens on the first business day of each month and closes on the fourth last business day of the month.

The minimum redemption amount for each issue is $500 and you can redeem in multiples of $500 up to the invested amount.

Redemption proceeds will be paid out on the first business day of the following month. A $2 non-refundable transaction fee per redemption request will apply.

When you redeem part or all of your savings bonds in between scheduled half-yearly interest payments, you will receive the accrued interest together with the redeemed amount.

This is the interest earned on your bond since the last interest payment was made.

For instance, suppose you successfully bought $1,000 of Singapore Savings Bonds issued in January and scheduled to make an interest payment of $6 in July.

If you submit a request in June to redeem the full $1,000 of your January bond, you will receive the following by the end of the second business day of July:

•Your redemption amount of $1,000; and

•Your scheduled interest payment of $6

However, if you decide to redeem in March instead, you will receive the following by the end of the second business day of April:

•Your redemption amount of $1,000; and

•Three months' worth of accrued interest (January to March), which is about $3.

Q How are Singapore Savings Bonds allotted?

A You may not get the full amount of savings bonds that you have applied for if they are oversubscribed. In such a situation, smaller applications will have a higher chance of being fully allotted.

If the total applications exceed the total issuance size, each applicant will receive at least $500 of savings bonds, with the amount increasing in multiples of $500 for every applicant until an applicant has received the full amount that he has applied for, or until all the available bonds have been allotted, whichever comes first.

If the number of applicants is so large that issuing $500 per applicant will exceed the total issuance size, the bonds will be allocated among applicants on a random basis, at $500 each.

The allotment method aims to distribute the bonds as evenly as possible so applying for a larger amount does not mean you will get more of the bonds. You should apply for only the amount you wish to buy.

If your application is unsuccessful or partially filled, your money - minus the $2 non-refundable fee for each application - will be refunded to the bank account you used for your application.

Q How do I know how many savings bonds I have received?

A The Monetary Authority of Singapore will perform the allotment and announce the overall application results on the third last business day of the month. You will be able to view the results on the Singapore Savings Bonds website (www.sgs.gov.sg/savingsbonds). There is also a hotline: 6221-3682.

Look out for the "cut-off" amount which will give an indication of how successful your application is.

If your application is equal or less than the "cutoff" amount, you will get the full amount you applied for.

If your application is above the "cut-off" amount, you will receive either the "cut-off" amount or $500 more than the "cut-off" amount.

You will be notified by the CDP via mail of the amount of savings bonds credited to your CDP securities account.

You can also check your holdings online via www.sgx.com/cdp and calling CDP (6535-7511). You will receive half-yearly statements from the CDP - in June and December - as long as you have holdings in CDP.

If your application is unsuccessful or partially filled, any excess money will be refunded by the end of the second last business day of the month.

You can check the amount refunded with the bank through which you applied for the bonds.

For example, if you applied for $30,000 and were allotted $13,000 of the bonds, you would get $17,000 in refunds.