Friday, July 03, 2009

Invest in Singapore Government Securities

Hi Mr Tan,
What is your view on the SGS (Singapore Government Securities)? Is it worth buying the bond for retail investors like me?
YS

REPLY
The interest rate paid on SGS is quite low, less than 1% per year, but it is safe.

If you can get a higher interest rate from bank deposits (which is guaranteed by the Government), it is better to put on bank deposit. The foreign banks offer higher interest rate and are still guaranteed by the Singapore Government.

If you wish to have a higher return, it is better to invest in a ETF (exchange traded fund). The return may be volatile in the short term, but it should give an attractive return over 10 years or longer.


5 comments:

Anonymous said...

As the usual saying, don't put all your eggs into one basket.
Putting all money into SGS is not without "risk". Yes, the principal is always intact because our government will not default. But the ultra low interest rate is not enough to cover our 7% GST, inflation etc, needless to talk about any growth.
Maybe put some money into SGS and invest the rest.

(PS: I am no financial expert and merely offering my personal & limited view)

starlight

Anonymous said...

DBS announced a cut in the saving interest rate yesterday. It is almost close to nothing. Where to put our money now? sigh...

Gras said...

Is the amount of Singaporean deposits held by foreign banks published somewhere? I am curious of the potential liability in the case of a foreign bank allowed to fail by its domestic government.

Anonymous said...

Hi Gras
If I'm not mistaken, depositors at any bank licensed by MAS will have their deposit guaranteed upto S$20,000. This holds good till 2010. Best for you to check at MAS website for ACCURACY. Good luck.

Anonymous said...

It is better to invest in SGS than investing in those insurance short term crap endwoment. No lock in, liquid and can benefit from apprecaition in price and risk free.

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