What is SSB Bond Ladder and how It works with DBS Multiplier?

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DBS recently announced changes to Multiplier account on 1st May. There is a write up on the changes over here

The Multiplier will require you to have salary credited and at least 1 of the 4 categories namely; Credit card spend, Home loan installment, Insurance and Investment. 

Out of the 4 categories, we shall look at the simplest 2 to fulfill. The first will be Credit card spend where you just need to spend $1 every month or just set recurring payment to any low-cost subscription you have. For 2nd categories will be investment and while many are not investment savvy, the SSB bond ladder which is fully backed by Singapore Government. Your principal investment and interest payments won’t be affected by the market.     

The sweet spot to earn 2% interest will be monthly eligible transactions of $2500 and with 2 categories which can easily be done with just salary credit. Now, what is SSB Bond Ladder?  

Singapore Saving Bond or SSB pays you coupon every 6 months and you will get your capital back when It mature which is 10 years period. The latest SSB rates is available here and here’s how to build the ladder. 

Assuming you start buying SSB from Jan 2019 for 6 months and each purchase is $500 which is the minimum sum. The total cost will be $3000 and the transaction fee of $12. This ladder will last you for 10 years and by then maybe Multiplier won’t be around. With this trick, you are collecting an average of 2% interest from SSB and 2% from Multiplier.  

As not everyone has a home loan with DBS and as the insurance they only take the first year premium as a valid transaction. It’s rather pointless to focus on the 2 categories. To me, the easiest way to unlock 2 eligible categories will be Credit card spend and investment via SSB. Do note that for SSB purchase it can only be cash and not SRS account as the dividends won’t be credited to your DBS account and you can purchase up to a cap of $200,000.   

Author: The Financial Guy

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