Rising interest rates on fixed deposits have attracted those in search of safe returns, with some customers enduring hours-long waits to secure promotional rates put out by several banks.
While squirrelling away money in fixed deposits appears to be an attractive option, there are other low-risk alternatives that investors can consider.
CNA cited these include the Singapore Savings Bonds, which have seen hot demand in recent months. Short-term Singapore Government Securities (SGS) bonds have also been tossed up by some experts as an alternative to holding cash.
Before deciding where to park your money, consider and compare investments that offer similar risks, said Providend’s senior client adviser Tan Chin Yu.
“The higher rates (for fixed deposits) are definitely attractive, but they should be compared with other similar instruments such as Singapore Savings Bonds, Treasury bills or even short-term SGS bonds,” he said.
WHAT ARE T-BILLS AND SGS BONDS?
Like the Singapore Savings Bonds, Treasury bills (or T-bills) and SGS bonds are debt securities issued and backed by the Singapore Government.
These domestic debt securities are issued for various purposes. For example, the Singapore Savings Bonds provide retail investors with a flexible and risk-free investment option.
T-bills, which have maturities of one year or less, and SGS bonds, with longer durations ranging from two to 50 years, are issued to develop the debt market.
All three have seen rising yields, like all other major economies’ bond yields, as global central banks go on a rate-hike race to curb inflation. Among them, T-bills offer the highest rate of return for now.
The latest six-month T-bill gave a yield of 3.32 per cent – the highest this year and up from 0.48 per cent in January. Likewise, T-bills with a one-year maturity have seen rising returns from 0.75 per cent to 3.1 per cent.
Meanwhile, the most recent issuance of two-year SGS bonds offered a coupon rate of 2.7 per cent, while the five-year equivalent issued earlier this month had a return of 2.92 per cent.
The Singapore Savings Bonds, whose rates have been dipping since hitting a record high of 3 per cent in its August tranche, have a 10-year average return of 2.75 per cent for October.