SSB and SIA Bond. Which bond to choose?

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Should i go for long term or short term?


Many bloggers had summarised the SIA Bond and what’s the pro and con. You can view the chili rating from Singapore IPO and in-depth information from Investment Moats.

SIA is offering the bond at 3.03% for 5 years to mature while SSB requires 10 years to mature. But we have to note that SSB you can withdraw out anytime with a fee of $2 and your principle will be fully returned back.

Let’s say I took a 5 years average of yield for SSB for the lowest rates in April, it will be 2.01% and while SIA is offering it at 3.03%. Which means the difference is 1.02% but I have to take up a lot of risks by applying for SIA bond.

Mth

Yr 1

Yr 2

Yr 3

Yr 4

Yr 5

Yr 6

Yr 7

Yr 8

Yr 9

Yr 10

Yearly Average

Jan-19
2.01
2.14
2.25
2.35
2.45
2.53
2.62
2.7
2.79
2.9
2.45
Feb-19
1.98
1.981.98
2.092.162.212.32.382.462.532.2
Mar-191.951.951.972.052.132.202.302.392.482.552.18
Apr-191.961.961.962.052.122.172.262.352.432.492.16
May-191.951.951.952.042.112.162.262.352.432.492.16
Jun-191.881.881.882.032.132.152.242.322.412.482.13
July-191.931.931.932.012.092.152.272.382.482.552.16
Aug-191.681.681.681.912.042.042.142.252.352.011.98
Sept-191.651.651.651.851.971.972.072.182.282.361.63

With that saying, I really don’t see any point in applying for SIA Bond when there is a risk-free bond with slightly lower interest compared to SIA. But i will be tempted if SIA is issuing the bond at a higher rates.

Author: The Financial Guy

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