A reader, who wished to remain anonymous, wrote in to askST about the average annual returns for the Singapore Savings Bonds (SSBs).
For this round (closing on Jan 26), the average annual return, if held to the 10-year maturity, will be 2.5 per cent.
The reader also asked: "What were the average annual returns (if held to maturity) for each of the offers last year?
"Is the average annual return, if held to maturity, expected to be higher than 2.5 per cent for the subsequent offers this year, given the expected rise in interest rates?"
Invest editor Lorna Tan answers the question.
The average interest rates of the previous three offers of SSBs are 2.63 per cent, 2.78 per cent and 2.44 per cent, if held to maturity.
The SSBs' returns are not directly linked to the United States rate hike. The return for holding a Savings Bond until maturity will match the average 10-year Singapore Government Securities (SGS) yield, which has been between 2 and 3 per cent in the past 10 years. So the returns of the subsequent issues this year are likely to be within this range.
Interest rates for Savings Bonds are determined by the average SGS yields in the month before announcement. As such, the interest rates for the next issue of Savings Bond will be based on the average SGS yields in January.
More askST stories here.