Around the second half of 2022, I blogged about my experience investing in Singapore Savings Bond (‘SSB’) portfolio. 9 months have since passed and I have patiently accumulated a sizeable fixed income portfolio with a long-term average yield of just above 3%. Considering how equities have performed during the same period, this component of my investment portfolio has outperformed! Furthermore, it is an additional bonus that the monthly dividends credited have increased the eligible transactions under my DBS Multiplier Account.
Although I have not maxed out the limit of $200,000 per individual, I have reached a threshold whereby I am not willing to allocate more cash into bonds. However, I still wanted to participate in April 2023’s SSB as the interest rates were attractive compared to the previous 2 issuances. Therefore, this article explains how I redeemed, re-invested and managed my Singapore Savings Bond portfolio.
How To Check Your SSB Portfolio
To optimise the average yield of your SSB portfolio, one would need to be aware of the tranche and quantity invested first. Thankfully, Monetary of Singapore (‘MAS’) website dedicated to SSB offers a bird’s eye view of one’s portfolio at a glance. I logged on with my Singpass and was presented with Diagram 1.
Thereafter, I clicked on “View details” to get the individual breakdown of the SSB tranches that made up my investment summary.
Diagram 2 shows the tranches that I have purchased and am currently holding onto. It also shows the average 10-year interest rate.
Now that I know exactly the specific tranche and amount invested, I went on to compare the annual returns of these various issuance as shown in Diagram 3.
At one glance, I could tell that the average returns of SSB with issue dates of August, September and October 2022 were lower than the subsequent tranches. Therefore, they were easy candidates to be culled from my portfolio. An even more compelling reason is that their returns are lower than the latest tranche- April 2023 as boxed in red. This made up my mind to gradually redeem these tranches and to re-invest them in subsequent SSB issuance.
How to Redeem Your SSB
I use OCBC bank to perform SSB transactions via online banking. The following steps should be similar whether you are using DBS or UOB bank.
Step 1 – Log onto OCBC online banking > Investments & Insurance > Singapore Government Securities
Step 2- Select “Redeem” Singapore Savings Bond and you will reach the next page as shown in Diagram 4.
Step 3- Key in the details such as original source of investment (cash or SRS), amount and the bond issue date. You should have all these information from the MAS SSB Portal as aforementioned.
Step 4- Review the information and complete the redemption. Wait 2 business days for the principal and pro-rata dividends to be credited back to your account. (Repeat the steps if you want to make multiple redemptions of different issuances)
Once I know that I have made a successful redemption, I proceeded to invest in the latest issuance. This portfolio optimisation allows me to improve the long-term average yield of my SSB portfolio. Note that the cost of an early redemption and re-investment is $2 per transaction, making it a total of $4. This transaction expense is so little that it really shouldn’t even be factored into your decision-making process in my opinion. Additionally, as I have shown, the time spent is less than 20 minutes but your long-term returns will improve (significantly for some bondholders) as a result.
This review summarises how I optimised my Singapore Savings Bond portfolio by comparing the long-term interest rates of the various tranches held, redeeming them early and re-investing the proceeds into higher-yielding bonds.
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