Maybank Foreign Currency Time Deposit Promotion

Enjoy attractive foreign currency interest rates below when you place a time deposit of at least 10,000 units of the respective currencies with Maybank.

Currency	3-Month rates (% p.a.)	6-Month rates (% p.a.)
AUD	2.70%	2.90%
NZD	3.80%	4.30%
USD	0.80%	0.85%

Promotion is available till 31 March 2015.

Please refer to the website for more details.

Budget 2015 : What's in it for You and Me?

The widely anticipated Jubilee Budget was finally out yesterday and will be subjected to parliamentary debate in early March 2015. So, what is the main thrust of the budget and what's in it for you and me?

This budget is one that is focused on preparing the nation for a challenging future while addressing the needs of the middle class and the poor. The "sandwiched class" of middle-income Singaporeans who have young children and have to support elderly parents stand to benefit the most from this budget as they are the main ones feeling the pinch from the rising costs of living. The continued efforts focusing on helping the poor and needy signifies a society that has matured.

BUDGET 2015 AT A GLANCE

Supporting the Middle Class
- 50% personal income tax rebate, capped at S$1,000 for Year of Assessment (YA) 2015
- Lower maid levy for more families with young children below age 16, up from age 12 and elderly parents, halved to $60 a month from 1 May; this translates to $720 savings a year
- Help with childcare and education costs with top-ups to the Child Development Accounts (up to S$600), Edusave Accounts (S$150) and Post-Secondary Education Accounts (up to S$500) of Singaporean children and
- Waiver of exam fees for Singaporeans sitting for national exams in Government-funded schools will be waived from 2015 and covers fees for PSLE, GCE N, O and A levels (savings of up to S$900). Exam fees for full-time ITE and polytechnic students will also be waived.

Strengthening Safety Nets
- Quarterly Silver Support cash payouts of S$300 to S$750 each for the low-income elderly for life
- One-off seniors' bonus of up to S$600 a year
- More cash for lower-income households

Boosting Retirement Savings
- CPF salary ceiling to be raised from S$5,000 to S$6,000
- Higher CPF contribution rates for workers aged 50 to 65
- 1% extra interest on first S$30,000 of CPF balances from age 55 next year, on top of the existing 1% extra interest on the first S$60,000 of savings. This means that the first S$30,000 in Special, Retirement or Medisave accounts can earn up to 6% interest risk-free
- Higher annual contribution cap for Supplementary Retirement Scheme

Encouraging Companies to Grow & Restructure
- More grants for companies to innovate and expand overseas
- Wage Credit Scheme (WCS) extended by 2 years, but at the half the current rate
- Corporate Income Tax Rebate of 30%, up to a cap of S$20,000 on their taxes payable, extended by 2 years
- Temporary Employment Credit extended by 2 years, increased to 1% of wages in 2015
- Planned hike in foreign worker levy to be deferred

Building Skills
- $500 SkillsFuture Credit for Singaporeans aged 25 and above to spend on further education and training from 2016; will be topped up regularly and will not expire. They can either choose to go for a short course with the S$500 or accumulate more credits for more substantial training in the future
- More study awards, course subisidies, internships and on-the-job training

More Progressive Taxes /  Tax Deductions
- Higher taxes for top 5% of income-earners from 2017, with those with chargeable income of more than S$320,000 paying 22% tax, up from 20%
- Tax deductions for donations made this year will rise from 250% to 300% to encourage
- Higher petrol duties; raised by 15 to 20 cents per litre; 1 year road tax rebate of 20% for cars, 60% for motorcycles and 100% for commercial vehicles using petrol to partially offset increase

Infrastructure
- Development expenditures to grow to S$30 billion by 2020, from S$12 billion in 2010
- Changi Airport's new Terminal 5 to be almost as large as Terminals 1 to 3 combined
- Increasing hospital beds and nursing home capacity

How will the budget benefit you and your family? Do you feel that the government should do more in certain areas? Which are these areas? Let us know.

Standard Chartered e$aver Promotion

From now till 31 March 2015, enjoy up to 1.35% p.a. interest, no lock-in period and no minimum deposit, when you bring in incremental fresh funds* (compared to October 2014's average daily balance).

Deposit Balance Tier	Prevailing Interest Rate on Deposit Balance	Bonus Interest Rate on eligible Incremental Balance	Total Interest Rate on eligible Incremental Balance
<S$50,000	0.10% p.a.	1.10% p.a.	1.20% p.a.
S$50,000 to <S$200,000	0.15% p.a		1.25% p.a.
≥S$200,000	0.25% p.a.		1.35% p.a.



Promotion has been extended to 31 March 2015 from 31 January 2015.

Please refer to the website for more details.

ANZ 2 Years Fixed Rate Home Loan @ 1.50% p.a.Promotion

Refinance your property online with 2 years fixed rate at 1.50% p.a. from the ANZ and receive up to S$500 cash credit.

A Fixed Rate Home Loan provides you with the certainty of knowing what your repayments are, and safeguards you against any increase in interest rates. Enjoy potential savings of up to S$10,588 a year if interest rates increase by 1.00% p.a. As we expect interest rates to go up in the near future, it is better to lock in fixed rates now rather than later.

Benefits at a glance:
•	Legal fees subsidy
•	Free private property valuation
•	Free enhanced fire insurance for the first year (Coverage include building, contents, loss of rent or temporary accommodation, personal accident and liability cover)

Please refer to the website for more details.

ANZ has won the Best Home Mortgage Loan Provider - The iProperty People's Choice Award Singapore 2014/15 

Retirement Planning by William Sharpe

For the hardcore technicals among us, I would like to share William Sharpe's blog with you. Even though more relevant in the US context, it is still very interesting to look at retirement income calculations and draw parallels to the Singapore context, especially since retirement planning and CPF Life are such hot topics in Singapore right now.

William Sharpe is an American Economist. He is the STANCO 25 Professor of Finance, Emeritus at Stanford University, recipient of the 1990 Nobel Prize in Economic Sciences and a co-founder of Financial Engines, Inc. Those who did Finance in school will be familiar with him.

Sharpe was one of the originators of the capital asset pricing model (CAPM), created the Sharpe ratio for risk-adjusted investment performance analysis, contributed to the development of the binomial method for the valuation of options, the gradient method for asset allocation optimization, and returns-based style analysis for evaluating the style and performance of investment funds.

Please refer to his blog, Retirement Income Scenarios here.

HSBC Advance Welcome Rewards Promotion

If you sign up for a new HSBC Advance relationship now, you will

• Stand to enjoy welcome gifts worth up to S$150 upon sign-up and qualifying for HSBC Advance, the HSBC Advance Visa Platinum credit card and Personal Internet Banking

• Enjoy up to 1.145% p.a. preferential interest rates for up to 3 months on your incremental average daily balance

• Get a cash credit of S$35 upon FX conversion with Worldwide Transfer and a successful online overseas telegraphic transfer transaction in foreign currency of a minimum amount of S$10,000 (or foreign currency equivalent)

• Enjoy a free one-month premium offer on any new regular premium life insurance plan.

Do note that this Promotion is only limited to the first 800 Eligible Customers who successfully sign up for a new HSBC Advance relationship with the Bank during the Promotional Period.

To qualify for the Welcome Reward of $70 direct cash credit, an Eligible Customer must satisfy the following criteria:

Enrol in HSBC Advance through :-

(a) (i) Total Relationship Balance ("TRB") eligibility criteria by placing a minimum of S$30,000 in deposits and/or purchase investments and/or insurance (cash / surrender value) with the Bank using fresh funds during the Promotional Period, which must be maintained with the Bank for at least 90 consecutive days from the date such funds are fully deposited; OR

(ii) salary crediting of at least S$3,750 every month for at least 2 consecutive months; OR

(iii) reoccurring deposit of at least S$2,500 every month for at least 2 consecutive months;

AND

(b) sign up for Personal Internet Banking.

HSBC Advance Visa Platinum Credit Card
Sign Up Gift - S$80 Cash Rebate
This Promotion is only applicable to new applicants of HSBC's Advance Visa Platinum credit card who submit Card applications during the Promotional period.

To be eligible for the $80 Cash Rebate, a minimum of one Qualifying Transaction must be charged to the newly issued Card within one month of issuance of the Card approved under this Promotion.

HSBC Advance is a tier of preferred banking below HSBC Premier banking and is targeted at middle-income bank customers and those with potential to become priority banking customers later on.

This Promotion is valid from 02 January 2015 to 31 March 2015

Please refer to the website for more details.

DBS Multiplier Top-up Promotion - Enjoy up to 3.96% Interest p.a.

Enjoy up to 2.08% p.a. on the first $50,000 of your savings in the DBS Multiplier Account, just based on your regular banking with us.

Additionally, enjoy 1.88% p.a. for 3 months when you top up your DBS Multiplier Account with fresh funds of S$1,000 to S$3,000,000. How to qualify:

1. Register your DBS Multiplier Account by 28 February 2015. Your existing account type will be “DBS Multi-Currency Autosave”, please ensure you fill in your Multiplier Account number.
2. Complete a one-time top-up by 28 February 2015.
3. Maintain top-up amount for 3 months.

So, new account holders can enjoy up to 3.96% p.a. on the first S$50,000 of your savings with DBS and up to 1.88% p.a. on new funds exceeding S$50,000 for 3 months. For existing account holders, however, you will only get to enjoy the 1.88% p.a. on the new funds exceeding S$50,000 for 3 months if you already have S$50,000 in your account before the start of the promotion.

That is still pretty good in the market right now. It is also probably better to keep your funds locked up in shorter tenures as opposed to longer tenures as interest rates are expected to go up. DBS is moving aggressively to attract deposits in a rising interest rate environment as the SOR (Swap Offer Rate) and SIBOR (Singapore Interbank Offered Rate) increases to maintain its market share. We can probably expect more promotions to come in the near future.

Please refer to the website for details and to register for the promotion.

Please also refer to our previous post here on the DBS Multiplier Account.

DBS Salary Credit Promotion

Credit your salary with DBS and get up to S$100.

Salary credited every month	Cash reward
S$2,500 – S$5,000	S$50
More than S$5,000	S$100

Note:

• Only customers who newly credit their salary to a DBS/POSB account are eligible for the cash reward.
• Registrants are to make own arrangements with HR on switching the salary crediting account to a DBS/POSB account
• Salary crediting arrangements need to be changed such that first salary is credited to designated DBS/POSB account latest by April 2015 to be eligible.

Promotion ends on 31 Mar 2015.

Please refer to the website for more details.

Best Credit Cards for Petrol 2015

So, which credit cards offer the best discounts on petrol? There are some questions you need to ask yourself. Are you a creature of habit who will only pump petrol with a certain brand or you are a spontaneous person who is not brand conscious and will pump petrol at the nearest petrol station?

Where you pump your petrol will affect which card is right for you as banks usually have tie-ups with one or two brands. The Citibank Dividend Card offers up to 18.3% savings at Esso and Shell while HSBC Visa Platinum Card offers up to 18.3% at Shell and Caltex with minimum monthly spending of $800 for each qualifying quarter. OCBC 365 Card on the other hand requires minimum monthly spending of $600 for the rebates to apply, otherwise only 0.3% cash rebates are awarded. In terms of flexibility, Citibank Dividend Card comes up tops and does not come with a monthly minimum spending requirement. However, to qualify for the rebates, each transaction must be $50 and above, which should be easily met if we are talking about a full tank of fuel.

Car owners typically spend $300 to $400 on petrol each month and credit cards typically offer 5% up to 20% discount / rebate on your petrol spend which can add up to a lot in a year.

Below is a summary of how much savings you can potentially get at the various fuel stations.

	Savings offered at
	Esso	Caltex	Shell	SPC
Citibank	Up to 18.3%	Up to 5%	Up to 18.1%	Up to 5%
HSBC	Up to 5%	Up to 18.3%	Up to 19.2%	Up to 5%
OCBC	Up to 18.3%	Up to 18.3%	Up to 5%	Up to 5%
UOB		Up to 21.7%		Up to 20%

Based on data provided on sgcarmart.com, there are a total of 190 petrol kiosks in Singapore -
Esso (63), Shell (58), SPC (40), Caltex (29)

The Best Credit Cards are:

The Citibank Dividend Card which promises more savings on petrol, groceries and health & beauty / pharmacies spend, dining spend and 0.5% on all other spend. What we like about the card is that it does not have any monthly spending requirements and you can have the flexibility of pumping your petrol at all fuel stations in Singapore and get some form of rebate / discount. However, one thing to note is that all eligible transactions under petrol, groceries, pharmacies and dining spend must be greater than $50, otherwise only 0.5% is awarded. It is an amount that is not too difficult to hit if you pump a full tank each time. The annual award is capped at a maximum of $800 Bonus Dividend Dollars. 

Savings at Esso - up to 18.3%

Esso site discount	Esso Smiles Card discount	Citibank Card discount	Citibank DIVIDEND Card*	Total Savings
5%	5%	4%	5% Cash rebate (on nett purchase)	18.30%

Savings at Shell - up to 18.1%

Shell site discount	Shell Escape discount	Citi Rebate (Applies after Shell discount)	Citibank DIVIDEND Cashback (applies after Shell Discount)	Total Savings
5%	5%	4%	5%	18.10%

Current Promotion
Online Festive Special: Get a $68 Instant Citi Rebate when you apply for two Credit Cards and a Ready Credit account.

Click here to Apply Now and we will direct you to the official card issuer's website.

HSBC Premier MasterCard Credit Card is the card that offers up to 19.16% savings at Shell and up to 18.6% savings at Caltex.

This card is only offered only to HSBC Premier customers. To start an HSBC Premier relationship, a minimum of S$200,000 in deposits, investments and/or insurance is required.

Current Promotion

Be rewarded with up to 15,000 air miles when you sign up for HSBC Premier MasterCard along with supplementary applicant today.

Click here to Apply Now and we will direct you to the official card issuer's website.

Alternatively, the HSBC Visa Platinum Credit Card also allows you to enjoy cash rebates of up to 5% on petrol and also 14% instant petrol discounts at all Caltex and Shell stations, that is up to 18.3% savings. Not forgetting up to 5% cash rebates on groceries and petrol, and up to 2% cash rebates on dining under the Quarterly Cash Rebates Programme with a minimum spending of $800 per month for all 3 months in a quarter. The rebates earned are subject to the conditions below.

 

 

Savings at Shell - up to 19.16%

 

HSBC Card Privileges at all Shell Stations	Instant site discount +	Additional HSBC cash rebates**	Effective savings
	Shell Escape card discount +
	exclusive HSBC instant discount*
HSBC Premier MasterCard® Credit Card	14%	6%#	19.16%
		OR
		3%+	16.58%
HSBC Visa Infinite/HSBC Visa Platinum	14%	5%#	18.30%
		OR
		3%+	16.58%
Other HSBC Credit/Debit Cards	14%	-	14%

* 14% instant discount is applicable for Shell fuel purchase only. 14% discount is calculated based on 5% site discount + 5% Shell Escape discount + 4% HSBC credit/debit cards discount. Excludes non Singapore issued Credit/Debit cards and HSBC Corporate Cards.
# Subject to minimum spend of S$800 per month on anything, anywhere, for all 3 months in a quarter.
+ Subject to minimum spend of S$400 per month on anything, anywhere, for all 3 months in a quarter.
** Rebates are capped at S$60 or S$120 (as the case may be) per Account per Quarter.

HSBC-Shell Escape Programme

With HSBC-Shell Escape programme, earn 1 Shell Escape point for every $5 charged to your HSBC credit cards and get 20% more Shell Escape points when you pump Shell V-power.

Refer to the illustration below to see how you can accelerate your fuel savings with HSBC-Shell Escape Programme:

If you charge S$2,000 (including S$200 at Shell) monthly on your HSBC credit card:

Monthly Spend Amount	Shell Escape points earned
HSBC credit card spend of S$2,000	400 (every S$5 spend = 1 Shell Escape point)
Shell spend of S$200 (earned on your Shell Escape Card)	100* (1L of Shell FuelSave98/95 & Shell Diesel = 1 Shell Escape point)
Total	500         (Approx. S$16 worth of Shell fuel)

Savings at Caltex - up to 18.3%

HSBC Card privileges at all Caltex Stations	Prevailing site discount	HSBC card discount	HSBC cash rebates	Effective savings
HSBC Premier MasterCard® Credit Card/ HSBC Visa Infinite/ HSBC Visa Platinum	5%	9%	5%#	18.30%
			OR
			3%+	16.58
All Other HSBC Credit/Debit Cards	5%	9%	-	14%

^# Subject to a minimum spend of S$800 per month on anything, anywhere, for all 3 months in a quarter.
⁺ Subject to a minimum spend of S$400 per month on anything, anywhere, for all 3 months in a quarter.
 

Current Promotion
 

Receive a welcome gift of a United Colors of Benetton Slash 24" luggage (worth S$319) when you sign up now, plus an additional United Colors of Benetton Slash 20" luggage and a kid's backpack (worth S$348) when you sign up with an additional supplementary card.

Online sign up exclusive:
Enjoy an additional S$20 cash rebate when you apply and submit your supporting documents online.

Click here to Apply Now and we will direct you to the official card issuer's website.

 

OCBC 365 Credit Card is a cashback card which offers up to 18.3% savings at Caltex and Esso and up to 5% at other petrol stations. It also offers rebates on online shopping, dining, groceries and telecommunications with a minimum spend of S$600 based on posted transactions in a calendar month. If you spend less than S$600, a flat 0.3% cashback is awarded. Cashback amount is capped at S$80 per calendar month or $960 per calendar year.

Savings at Caltex - up to 18.3%

Fuel savings of 18.3% at Caltex comprises of :
(i) 14% upfront discount which includes station onsite discount and OCBC 365 Credit Card discount and (ii) 5% cashback on the nett petrol amount charged to OCBC 365 Credit Card.

This promotion is valid till 30 June 2015 at all Caltex service stations in Singapore.

Savings at Esso - up to 18.3%

Please see below for the various types of rebates.

Current Promotion

Apply now and get 2 years of annual fees waived.



Click here to Apply Now and we will direct you to the official card issuer's website.

With the UOB One Card, you can earn up to 3.33 % cash rebate on all spend and an additional 2% cash rebate on overseas spend. Besides that, you can also enjoy up to 20% SMART$ rebate at participating merchants

Simply spend over S$300 a month to get up to 3.33% in cash rebate per quarter to automatically offset your credit card bills! The more you spend, the more cash rebate you will get.

Assuming your UOB One Card Statement date is 15th of every month, a minimum of 3 purchases with a total minimum spend must be posted before the statement date in order for you to earn the quarterly cash rebate.

UOB Fuel Power
UOB Fuel Power is the fuel savings programme by UOB cards.

Savings at Caltex - up to 21.7%
Enjoy generous savings of up to 21.7%* on Caltex Platinum 98 petrol at Caltex with your UOB One Card or up to 20.0% with other UOB Cards.

For even more savings, sign up for a Caltex Thanks! card and earn 1 Thanks! Point with every litre pumped and get S$1 off your next Caltex purchase with just 40 Thanks! Points. Promotion ends 30 June 2015 at all Caltex service stations in Singapore.

Savings at SPC - up to 20%

Now you can enjoy up to 20% off your petrol purchases* at SPC with your UOB and SPC&U Cards. Plus, get another S$10 off instantly with just UNI$600⁺.
For even more savings, sign up for an SPC&U Card and receive it instantly at the station.

• Enjoy an incredible 15% off petrol purchases with your UOB Credit/Debit Card and SPC&U Card.
• Save up to 5% discount in a single transaction for every S$51 charged to your UOB Visa or MasterCard Card.
• Boost your savings with an additional S$10 off instantly with just UNI$600.

• Promotion is valid till 31 Mar 2015.

Click here to Apply Now and we will direct you to the official card issuer's website.

Even though UOB cards offer higher savings at Caltex and SPC, they are subjected to validity periods and tend to be less flexible as no discounts are offered at the other petrol stations.

We hope you have found your most suitable credit card from this post. Please share this with your friends if you find this useful. Thanks and have a great day ahead!

How to Invest in Singapore Government Securities?

Singapore Government Securities (SGS) refers to both SGS Bonds and T-Bills. So, how do individual investors invest in SGS? What factors should consumers consider before deciding whether to place their money in SGS?

What are Singapore Government Securities (SGS) and Treasury Bills (T-Bills)?

SGS and T-bills are marketable debt instruments issued by the Government of Singapore through the Monetary Authority of Singapore (MAS). SGS and T-bills are backed by AAA-rated credit of the Singapore Government.

When you invest in SGS and T-bills, you are lending your money to the Singapore Government in exchange for interest payments. The issuer (which is the Government of Singapore) will pay you fixed sums of interest according to schedule, and return your principal on maturity.

The minimum investment amount is S$1,000, and you can invest in multiples of $1,000. You can invest with cash or your CPF savings. Investors can choose to hold the SGS to maturity and receive the face value; or sell SGS before maturity at the prevailing market prices in the secondary market to other investors like banks. Do note the prevailing market prices for SGS can be higher or lower than the purchase price.

T-bills are short-term debt securities that mature in one year or less from their issue date. They are bought and sold at a discount, i.e. at a price less than their face (par) value, and when they mature, the Government will pay the holder an amount of S$ equivalent to the face value of the security. Therefore, the interest earned on the T-bill is the difference between its purchase price and face (par) value. They are denominated at nominal values of S$1,000 and traded at a rate of discount basis.

SGS bonds are longer-term debt securities, which pay a fixed rate of interest (called the coupon) every six months for the life of the securities and then their face (par) values upon redemption on maturity. They are  not issued at a discount unlike T-bills, and have typical maturities of 2, 5, 10, 15, 20 and 30 years.

 

The most recently issued SGS bonds in each of these tenors are typically known as the benchmark securities and tend to be more actively traded. Older and more seasoned SGS bonds become off-the-run issues and tend to be less actively traded. SGS bonds are also denominated in nominal values of S$1,000 and traded on a price basis expressed in terms of S$100 principal. 

 The table below illustrates the difference between SGS and T-bills.

	T-Bills	Bonds
Issuer	Singapore Government	Singapore Government
Tenor	1 year	2, 5, 10, 15, 20 and 30 years
Interest Rate	Discount	Fixed Coupon
Coupon Payments	N/A	Every six months
Minimum Denomination	S$1,000	S$1,000

Why does the Government issue SGS and T-Bills?

The main objectives of issuing SGS are to:

• Provide a liquid investment alternative with little or no risk of default for individual and institutional investors;
• Establish a liquid government bond market, which serves as a benchmark for the corporate debt securities market; and
• Encourage the development of skills relating to fixed income financial services available in Singapore.

Governments in other countries usually issue debt securities to raise the money needed to pay off maturing debt and finance their operating and development expenditure. However, the Government Securities Act and Local Treasury Bills Act provides that the proceeds from SGS issuance are paid into a Government Securities Fund, and outward payments from this fund are generally limited to the paying of interest and repayment of principal associated with SGS issuance only. The Singapore Government has generally operated on a balanced budget and does not need to borrow funds through the issuance of government bonds to finance its expenditure.


How can I buy SGS or T-Bills?

You may purchase SGS and T-bills at primary auctions or in the secondary market.

i) At a Primary Auction
 

1-year T-bills and SGS bonds are issued according to an issuance calendar published at the end of the preceding calendar year on the SGS website (www.sgs.gov.sg). Auctions for the 1-year T-bills and bonds typically take place three business days before the respective issuances.  Prior notice is given on the SGS website one week in advance. Notices announcing the bond auctions and 1-year T-bill are published both on the SGS website and also advertised in the newspapers.

MAS introduced “mini-auctions” of SGS bonds in 2015 as a regular feature in the issuance calendar to address unexpected instances of strong demand for bonds outside the issuance calendar. Mini-auctions are re-openings of SGS bonds with a maximum size of S$1 billion. Unlike normal auctions, should MAS decide to conduct a mini-auction, it will announce the bond to be re-opened one month before its issuance date*. The possible dates of mini-auctions will be published in the issuance calendar.

Bonds scheduled in the issuance calendar will not be re-opened via mini-auction until at least six months after they were first issued in the year. In line with the current practice, the issuance size will be announced five business days before the mini-auction date. Mini-auctions will follow the same procedures as regular SGS auctions.

*Note: If MAS decides not to conduct a mini-auction, it will also make the announcement on the same day, i.e. one month before what would otherwise have been the issuance date.

After the auction announcement, the most convenient way for most individual investors to submit bids for SGS is through the DBS, UOB and OCBC Automatic Teller Machines (ATMs). Similar to an Initial Public Offering (IPO) application, you will need a valid individual Central Depository (CDP) account number and your bank account will be debited for the full bid amount at the point of application. Successful bidders will receive a statement notification from CDP, typically the next business day after the issuance date.

Besides using the ATM, you can also continue to submit your bids through any of the Primary Dealers or Secondary Dealers who will submit bids to the PDs on your behalf, though transaction charges may be levied for manual applications. A list of Primary Dealers is available at the SGS website.

ii) In the Secondary Market

 As SGS and T-bills are custodised with CDP, you can approach the branches of any of the SGS agent banks/dealers to sell your holdings at the most competitive market price available. Transaction fees may apply. The purchase/sale of SGS will be reflected in your CDP statement.

You may also wish to note that although you can sell SGS over the counter with any Primary or Secondary Dealer, only Primary Dealers are prepared to buy and sell SGS under all market conditions. You may wish to check for the best market prices by getting quotes from multiple dealers. Prices may also change from day to day according to market conditions and you may not be able to sell your SGS for the same price that you paid for them.


What are the benefits and risks of SGS?

Benefits

Risks

Allows investors to lock in a fixed rate of return over the tenure of the bond Coupon payments from SGS bonds generate periodic cash flows before the SGS matures. This may attractive to investors who are saving for future outlays such as education or retirement, but who also want some periodic income stream in the interim. Interest income from SGS is tax exempt for individuals Liquidity – Investors can buy or sell SGS through the secondary market. Diversification – SGS can help diversify risks in investment portfolios.

Should the investor wish to liquidate the bond before maturity, he is subjected to fluctuations in the price of the bond. The price received by the investor can be higher or lower than the actual price paid. The investor is subjected to the credit risk of the issuer (i.e. Singapore Government)

How do I calculate the returns on my SGS or T-Bill investment?

(i) For T-bills

T-Bills do not have coupon payments and are issued at a discount. Therefore, the yield that you get upon maturity is dependent on the difference between the price paid for and the face value of the T-Bill. For example, if you pay S$95 for a T-Bill with a face value of $100 at an auction for a 1-year T-Bill, our yield to maturity or amount earned if you hold the bond for one year is = (S$100-S$95)/95 x 100 = 5.26%

(ii) For SGS

For SGS bonds, the returns due to an investor are dependent on three factors:-

• The coupon rate
• The price paid for the bond
• The capital gain / loss due to sale of bond before maturity

One common measure of returns is the yield to maturity (YTM). The YTM combines the coupon income of a bond and the capital gain or loss from holding the bond to maturity. It also considers the timing of the bond’s cash flows and interest-on-interest, although it assumes that the coupon payments can be reinvested at an interest rate equal to the YTM.

For example, assume you bought a bond with 1 year to maturity at S$95 and a face value of S$100. The coupon payment is S$4. The capital gain at maturity is S$5 (S$100 – S$95). Therefore, the total gain is S$5 + S$4 = S$9. The YTM would then be S$9/S$95 x 100% = 9.47% from present till maturity of the bond.

You may also use the Bond Calculator on the SGS website to calculate your returns.

For more information on SGS, please refer to the list of Frequently Asked Questions for Retail Investors on the SGS website.

Do you have any more questions relating to investing in Singapore Government Bonds? Are you ready to diversify your portfolio by allocating some funds to low risk SGS? You can write in to us about them.