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Low Risk Investments in Singapore

Low Risk Investments in Singapore to Grow Your Money

profileJustin Oh

Looking for low-risk investments to park your money and grow your savings?

Source: Giphy

Whether you’re new to investing or seeking shelter in low-risk investments from the volatile stock market, here are some of the safest, low-risk investments in Singapore for you to park your money!


TL;DR: Low Risk Investments in Singapore to Grow Your Money

Investment VehicleSafetyReturnsLiquidityTenor
Singapore Savings Bond (SSB)Backed by Singapore government with "AAA" credit ratingSep 2022: 2.75% p.a.Medium10 years
Singapore Government Securities (SGS) BondLast (Issue date: 1 Sep 2022): 2.875% p.a.Medium (might be a hassle)2 to 30 years
Treasury Bills (T-Bills)Last (Issue date: 20 Sep 2022): 3.32% p.a.Low6 months to 1 year
Fixed DepositsFunds insured by SDIC (up to $75,000)1.30% - 3.50% p.a.High (but with fees)2 to 18 months
Insurance Savings Plans0.70% - 1.60% p.a.High (but with some fees)None
Cash Management AccountsManaged by MAS-licensed roboadvisors/digital wealth services/brokers1.50% - 3.20% p.a. (Returns are projected and NOT guaranteed)HighNone

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Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. Readers should always do their own due diligence and consider their financial goals before investing in any investment products.


Singapore Government Securities

First up, we have the Singapore Government Securities, consisting of the Singapore Savings Bond (SSB), Singapore Government Securities (SGS) bonds and Treasury Bills (T-bills).

These securities are completely backed by the Singapore Government, which has a “AAA” credit rating. This reduces the risks of investing in SGS bonds to the bare minimum (read: there’re still risks tho).

Singapore is one of only 11 countries in the world that enjoy the “AAA” credit rating! Some other countries include Switzerland, Australia, and Finland.

Having such a strong rating arguably makes the SGS some of the safest products in the market.

Singapore Savings Bond (SSB)

Perhaps the most popular of the bunch, SSBs have become a much more attractive option for many Singaporeans since interest rates rose.

Aside from its ultra-low risk, investors can lock in interest rates for one whole decade! Early redemption is also possible and fairly simple if you don’t want to wait for the whole 10 years.

The downsides are that withdrawal can take a while (up to a month) since redemptions are processed by the second business day of the following month and that there are limits to how much you can invest during each round.

Click in for a more in-depth look and how to invest in SSBs:

Singapore Government Securities (SGS) Bonds

Another option to consider is SGS bonds which currently have a higher interest rate of 2.875% p.a. than SSBs based on the latest auction results (issue date: 1 Sep 2022). It features the same backing from the Singapore government with varying tenors of 2 – 30 years.

While they can be more liquid than SSBs however, you may find it a hassle to sell SGS bonds on the secondary market and thus, not suitable for beginners. Moreover, the interest rates are only determined during the auction date. Nonetheless, if you’re fine with parking your money for the specified tenor, you can reap the higher interests!

Click in for a more in-depth look and how to invest in SGS Bonds:

Treasury Bills (T-bills)

Lastly, we have T-bills, a “hidden gem” that many Singaporeans seem to have overlooked. Like SSB and SGS bonds, these are ultra-low risk investments with a short tenor of either 6 months or a year, with 6-month T-bills being the most common. The best part? The latest interest rates for T-bills are standing at 3.32% p.a. (issue date: 20 Sep 2022)!

This beats the majority of fixed deposits and you don’t have to queue at a bank to apply either.

Source: Tenor

That said, T-bills are rather illiquid even though they can be sold in the secondary markets and their interest rates are not announced until the auction date itself.

Click in for a more in-depth look and how to invest in T-bills:


Singapore Deposit Insurance Corporation (SDIC) Insured Investments

Next, we have SDIC-insured investments where SDIC will reimburse your investments of up to $75,000 in the case that the organisation you are investing with goes bankrupt. These are also ultra-low-risk investments with an extra layer of protection just in case.

Fixed Deposits (FDs)

Not so keen on dealing with investment limits, and uncertain interest rates? Traditional fixed deposits are still a great and safe way to go, especially with all the banks rapidly increasing their interest rates in the past few months.

FDs are also very liquid as you can withdraw them at any time. However, you will have to eat some pretty harsh early withdrawal fees of 0.5% – 1.0% p.a. of the sum you’ve invested. Lastly, you’ll need to hit much higher minimum investment amounts of $5,000 or more depending on the bank.

Click in to look at what the banks are currently offering:

Insurance Savings Plans

If you want more liquidity in case of emergencies, as well as some insurance coverage, Insurance Savings Plans can be a great option for you to consider. These accounts are also SDIC-insured and give pretty steady (but lower) returns.

Click in for a more in-depth look at Insurance Savings Plans:


Cash Management Accounts

If you want an all-rounder in terms of liquidity and low risk, cash management accounts are a great choice to help you invest in money market funds

That said, these are not backed by the Singapore government or SDIC-insured. Thus, you will have to put your trust in the organisation that you are investing with.

Unlike the others listed above, the returns stated are only projected and NOT guaranteed. So there is a chance that you could suffer losses in your investment.

Click in for a more in-depth look at cash management accounts:


Afterthoughts

Lw-risk investments may not offer the excitement of high returns in the stock market, but they are a steady and safe way to grow your money, especially during times like these with inflation at a ridiculous 7.0% (July 2022).

While the returns here won’t beat inflation, it’s definitely better than nothing!

If you’re new to investing, the above-listed options are also a perfect way for you to dip your toes into the world of investing.

But while all of these are low-risk, remember that there ARE still risks involved, as with anything related to investing. As always, be sure to do your own due diligence and read up on the investment vehicles listed here by clicking on the relevant articles to find out more.

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About Justin Oh
Your average Zillennial who is obsessed with anime, games, movies and of course, personal finance. Join me as I break down personal finance into easily digestible and fun bits!
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