Should you buy S-Bonds?
Thoughts of diversifying your money // Bonds is the safest instrument
What you should know before making this decision?
- Does it beat inflation rate? (5 Yrs average – 3.12%)
- The best/safest bond (3 Options)
- Singapore Savings Bond
- Average return per year is 2.32% / Doesn’t beat inflation
- Index
- Average return per year is 2.65% (Not including growth rate) / 3.65% is its actual return (Including growth rate) / Beat inflation
- Open Market (SGX)
- Higher chance to default / Beat inflation
- Singapore Savings Bond
- Your opportunity cost
Average yearly return is at 11.48% // Alternative is SPDR (another ETF of STI) – 7.28%
ConCRUsion
You should invest into an instrument that beats the inflation rate (3.12%) or else it makes no sense to even invest. Why? because your money still depreciates and you lack financial knowledge, hence making you act stupidly irrationally. The idea of putting STI as an opportunity cost is for people my age( 20’s/30’s) who has a stable stream of income and are willing to take the risk (even thou is low).
My point-of-view on bond is that its growth rate is so slow that is actually smarter for u to put the money into CPF (5% interest). Why? because by the time your bond investment grows to a large sum, you would probably be at the age where ur CPF money can be withdrawn.
Rich = making financially sound decision one at a time
