Sg Gov Bonds vs FD

[briantgw]

Hi, saw your post (https://alphaedgeinvesting.com/2022/06/13/bananas-for-fixed-depositors/) on sg gov bonds vs FD. Any risks I should consider before deciding to invest in sg bonds?

Thanks for posting on this..first time i read something on SG gov bonds

[alanyeo]

Thanks for the question.

As with every financial instruments, there is always risks involved. Good news is that we can always manage the risk.

As with the SG government bonds, its rather straight forward. The risks is the SG Government defaulting on its obligation. In this case, its close to none.

It is meant to be a fixed deposit alternative. For those who are always inclined to put their idle cash into FD, this is definitely one instrument that they can look at now. The SG Government bond is paying a giving a higher yield compared to the FD rates. Moreover, the risk of the local banks defaulting is definitely higher than that of the SG government. Therefore, if SG GOV Bond is used instead of FD, the return is better and yet the risk is lower.

Hope this is helpful.

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