The Singapore Savings Bond (SSB) programme — which has
been touted as the safest form of investment in the market but
struggled to gain strong demand — has been particularly attractive
to older investors and small savers, figures from the Monetary
Authority of Singapore (MAS) showed yesterday.
Since the launch of the programme in September 2015,
more than 37,000 individuals have invested in excess of S$1 billion
into the bonds, the MAS said.
The programme appealed the most to individuals aged 48
and above, who made up 44 per cent of investors, followed by those
aged between 31 and 40 at 22 per cent. Individuals aged between 41
and 47 made up 18 per cent of the investors, while those aged
between 18 and 30 formed the smallest group at 16 per cent.
The bonds also appealed the most to small savers, with
55 per cent of all applications comprising investments of S$10,000
and below. At the other end of the spectrum, 21 per cent were
between S$40,500 and S$50,000.
SSBs are a low-entry, risk-free investment vehicle
designed to help Singaporeans meet their long-term financial goals
and to save for retirement. Interest rates increase the longer the
investment is kept, and individuals can choose to cash out before
the 10-year tenure is up without suffering any penalty. However,
industry watchers have noted that SSBs have not been able to garner
the level of interest expected, mainly because of a lack of
awareness, low interest rates and limited application channels.
Amid weak demand for the programme, the MAS last month
revised the issuance size for this year, cutting the SSBs on offer
to S$2 billion, half of the $4 billion upper limit last year.
Mr Christopher Tan, CEO of financial advisory firm
Providend, said: “For most financial products in the market,
they’re being sold, salespeople go out and push them; whereas for
SSBs, nobody is selling them and the public has to apply for it
through the available channels. I think this has resulted in people
not knowing much about the product.”
Since the start of the programme, investors have been
able to apply for SSBs online through DBS/POSB’s Internet Banking
portal, apart from the ATMs of DBS/POSB, OCBC and UOB.
MAS said it has added three additional online
application channels, through OCBC’s and UOB’s Internet Banking
portals and OCBC’s mobile application.
UOB economist Francis Tan attributed the lukewarm
take-up largely to low yields.
“With the expectations that yields will go up this
year, I think the prospect of better returns will draw more people
to invest in SSB, so we can expect the volume to go up. But at the
same time, higher interest rates coming on the back of better
economic conditions mean that equities may also give better
returns, so the spread between the equities and bonds may remain,”
he said.
Mr Christopher Tan added: “SSB is a product that also
targets the small investors, which is a reason why the starting
amount is S$500, so that old people, homemakers can also
participate … SSB is an excellent product. It’s low risk and tagged
to a AAA-rated bond — it’s quite difficult to find something like
that.”
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