HOW TO INVEST
So how do you approach Singapore Savings Bonds?
Chan said bonds and low-risk investment products largely act as “stabilizers” in an investment portfolio. Although different instruments offer varying degrees of security and return, they generally help to mitigate overall risk by providing stable returns for a portion of the portfolio.
Therefore, Singapore Savings Bonds can be a place to deposit funds that need to be kept safe for the short term but do not need to be used urgently given the waiting time of at least 30 days, he added.
As for how much to invest, experts said it depends on factors such as risk appetite and overall portfolio size.
For those with a large investment portfolio looking for lower risk alternatives, “going up to the limit of S$200,000 is not unreasonable, especially if it’s a relatively small portion of the portfolio,” he said. said Mr. Chan.
“If they need a higher return, have a long-term horizon, and are willing to take on more risk, they may want to prioritize allocating their investment funds to other things like stocks,” he added.
Age could also be a factor to consider when deciding on asset allocations, although Ms Weber stressed that the ability to take risks is “not age per se”. , but its time horizon.
“The longer the period of time between now and when you need the money, the greater the proportion of stocks you can have in your portfolio, because you have the ability to withstand short-term downturns without having to liquidate it,” she said. Explain.
“If you’re looking to use up a bucket of funds in the next one to five years – and that could be income for living expenses for retirees or savings for property for young people – you don’t want to take big risks. with this amount of money.
“Singapore Savings Bonds may be right for you, alongside other low-risk instruments such as term deposits, short-term, high-quality bond funds or annuities.”
It is also debatable whether a lump sum or “ladder” approach would work better for Singapore Savings Bonds.
Again, pundits said there was no one-size-fits-all strategy given the smaller allocations in recent shows due to high demand. Also, as interest rates tend to rise, other more attractive options may emerge.
For example, banks in Singapore have raised their rates for fixed deposits, while some robo-advisors like StashAway are also starting to raise interest rates for their cash management accounts.
Mr Wong said: “I think we could be close to the top of the current interest rate cycle, provided inflation does not remain high for an extended period. Therefore, lump sum investments might be preferred to lock in the current return.
“But again, your investments could be hampered by a reduced allocation…so you may need to subscribe to many subsequent issues if you want to use a significant amount in Singapore Savings Bonds.”
But ultimately, because returns from low-risk options can’t keep pace with inflation, investors may need to take risks in their portfolios, such as having a comfortable mix of stocks and currencies. bonds, Ms. Weber said.
“Staying invested in an appropriate portfolio is the best way to achieve your goals on time. You need to weather the volatility to take advantage of the rally and reap the long-term returns.