HOW TO SPEND
So how should one start approaching the Singapore Savings Bonds?
Mr Chan said bonds plus lower-risk investment products largely act as “stabilisers” in an investment portfolio. While different tools offer varying degrees of safety and earnings, they typically assistance to moderate overall risks by providing stable comes back for a portion of the portfolio.
Therefore, the Singapore Cost savings Bonds can be a place to park funds that needs to be kept safe in the short term given but do not need to be used that urgently given the wait time of at least thirty days, he added.
As for how much to invest, experts said that depends upon factors such as one’s risk appetite and overall portfolio size.
For those having a large investment profile and are looking for lower-risk alternatives, “going so far as the limit associated with S$200, 000 is not unreasonable, especially if that represents a relatively little part of the portfolio”, said Mr Chan.
“If they require a greater return, have a long-time horizon and are prepared to take on more risk, then they may want to prioritise allocating their expenditure funds to other activities such as equities, ” he or she added.
Age group could also be a consideration when it comes to deciding on asset allocations, although Mrs Weber stressed that the ability to take risks is definitely “not age for each se” but your time horizon.
“The longer the time of time you have in between now to when you need the cash, the larger the percentage of equities you could have in your portfolio because you have the ability to stay through short-term downturns without having to liquidate it, ” she explained.
“If you are looking to utilize a bucket of funds in the next one to five years – which could be income for living expenses for retirees or even saving for a residence for young people – you do not wish to take big dangers with this sum of money.
“The Singapore Financial savings Bonds can be ideal for you, alongside various other low-risk instruments like fixed deposits, short duration, high-quality connection funds or annuities. ”
One might also wonder if a lump-sum or “laddering” approach would work better for the Singapore Cost savings Bonds.
Once again, experts said there is absolutely no one-size-fits-all strategy provided the smaller allotments in recent issues due to strong demand. Furthermore, as interest rates development higher, other more appealing options might arise.
For example , banking institutions in Singapore were raising their prices for fixed deposits, while some robo-advisers such as StashAway are also starting to increase interest rates for their cash-management accounts.
Mr Wong mentioned: “My view is the fact that we could be close to the peak of the present interest rate cycle, supplied inflation does not remain elevated for an extented period. Hence, huge investments could be favored to lock in the current yield.
“But again, your own investments could be affected by reduced portion … so you might have to subscribe to many following issues if you want to use a meaningful amount within the Singapore Savings Provides. ”
Yet ultimately, with returns from lower-risk options unlikely to keep pace with inflation, investors may need to take a few risk in their portfolios such as by having a comfortable mix of equities and bonds, Mrs Weber said.
“Staying invested in a suitable portfolio is the best way to achieve your goals within your time frame. You need to trip out the volatility to capture the particular recovery and reap the long-term comes back. ”