T-Bills vs Singapore Savings Bonds vs Fixed Deposits vs Endowment Plans: Which Investment is Right For You?

Conservative investments have low risk and modest returns, and are favoured for wealth preservation. Learn how four of the most common investments for risk-averse investors work, and whether they may be right for you.

ValueChampion Editorial Team

by ValueChampion Editorial Team on Feb 29, 2024

Investing Growing Savings


In investing, risk and return are closely correlated; as you seek higher returns, you also have to take on more risk. This is true on the other end of the spectrum as well. Low-risk investments tend to have comparatively lower returns.

Low-risk low-returns investments, or conservative investments, have their place and purpose in the life cycle of an investment portfolio. Conservative investments are ideal for wealth preservation, where potentially higher returns are sacrificed for greater stability.

One practical example would be during retirement. A conservative strategy ensures your nest egg remains available to fund your retirement needs while helping your spending power keep pace with inflation.

Additionally, conservative investments can also be used to balance out more aggressive investments, for better overall diversification in your portfolio.

Let’s take a closer look at four popular conservative investments in Singapore.

4 Popular Conservative Investments in Singapore
Treasury Bills (T-bills)
  • Tenure: 6 months or 1 year
  • Yield: 3.71% (6-month) or 3.47% (1-year) (info as of 29 Feb 2024)
  • Min. investment: S$1,000 (in multiples of S$1,000)
  • Tradeable: Yes
  • Purchase using: Cash, CPF, SRS
Singapore Savings Bonds (SSBs)
  • Tenure: Up to 10 years
  • Yield: 2.88% (Feb 2024)
  • Min. investment: S$500 (in multiples of S$500, up to S$200,000)
  • Tradeable: No
  • Purchase using: Cash, SRS
Fixed Deposits (FDs)
  • Tenure: 6 to 24 months
  • Yield: up to approx. 4%
  • Min. deposit: Varies according to bank
Endowment Plans
  • Tenure: 5 to 20 years months
  • Yield: Up to 4.25% (projected)
  • Min. investment: Varies according to insurer
  • Tradeable: No, and early surrender incurs stiff penalties
  • Premiums paid in: Cash
stock investing on phone
Source: Unsplash

Treasury Bills

Treasury Bills, or T-bills for short, are short-term debt securities issued by the Singapore Government. They carry a AAA credit rating (the highest level possible), and are widely considered to be among the safest investments available.

T-bills are issued to investors at a discount to their face value. Upon maturity, investors will receive the full face value. Investors can choose between T-bills with six-month and one-year tenures, according to their investment timelines.

One distinguishing feature of T-bills is that the yield of is not made known beforehand, Instead, you will only know the yield upon redemption at maturity.

Read Also: What Are Singapore Treasury Bills and Are They a Good Investment?

How to Invest in T-bills

T-bills are distributed through auctions, and investors can choose between non-competitive bids and competitive bids.

Non-competitive bids do not have a specified yield, and you need only indicate the amount you want to invest. Your bid will be invested regardless of the yield of the T-bill.

Up to 40% of the total issuance amount is reserved for non-competitive bids, with spillovers being allocated on a pro-rated basis. The remainder of the issuance is allocated to competitive bids by specified yield, up to the cut-off yield.

On the other hand, competitive bids carry your specified yield, and your funds will only be invested if your specified yield comes in below the cut-off yield. Hence, competitive bids have a chance of not being allocated if the specified yield is too high, while bids that are close to the cut-off yield may only be allocated partially.

You may bid for T-bills using cash, CPF or SRS funds. T-bills are also tradeable on the secondary debt market, which means you can choose to sell your T-bill early instead of holding it till maturity,

Be aware that prices of T-bills fluctuate before maturity, which means you could be selling at a loss.

Are T-bills Right For You?

T-bills are ideal for those seeking a safe investment that offers a fixed payout at the end of the investment tenure. They are also suitable for short-term investing of between six months to one year.

In addition, there is no upper limit to how much you can invest in a T-bill, although this will be tempered by the overall limit per issuance.

Singapore Savings Bonds (SSBs)

Singapore Savings Bonds (SSBs) are government-issued bonds that pay out a coupon that steps up on a yearly basis. This means that the longer you hold your SSBs, the higher your returns will be.

SSBs are issued with tenures of up to 10 years, making them suitable for long-term investors. That doesn’t mean that you have to hold your bonds for the entire duration though — you are free to redeem your holdings in any month to receive your principal and the accrued interest.

Note that SSBs cannot be traded on the secondary market, which means their interest rates are not affected by market movements.

Read Also: Interest Rates and Returns for Singapore Savings Bonds (SSB)

How to Invest in SSBs

SSBs are issued every month, and you can subscribe to the tranche that is available for the month. You may start investing with as little as S$500, although each increment has to be in multiples of S$500. The maximum each individual may invest in SSBs is capped at S$200,000.

SSBs are highly flexible. You can invest a lump sum in a single tranche, or invest small sums in several different tranches. Be aware that coupon rates vary between each SSB, but the differences are likely to be minor.

Once you’ve bought your SSBs, simply sit back and wait for your returns, which are paid out every six months from the month of issue.

You can purchase SSBs using cash or funds in your SRS.

Are SSBs Right For You?

The key to maximising your returns when investing in SSBs is to hold them for the full 10 years — or as close to it as possible. This will ensure that you receive the highest possible yield.

To illustrate, consider the SSB yield for March 2023. This tranche pays out 3.01% in Year 1, climbing to 3.53% in Year 10. The average yield is 3.15% per annum if you hold for the full 10 years.

Fixed Deposits

fixed deposits illustration
Source: Pexels

Bank fixed deposits (FDs) are another option to increase your returns. These accounts offer higher interest on your deposits, often significantly higher than the basic savings rate.

However, in exchange, you have to maintain your deposit for the specified duration. There may also be other requirements to fulfil, such as a minimum deposit amount, or having a pre-existing priority banking relationship.

Read Also: Best Fixed Deposit Rates & Promotions in Singapore

How to Use Fixed Deposits

As explained above, you simply need to deposit the required amount of funds and maintain the deposit for the duration of the FD.

Any eligible interest will be added directly into your account, so there’s no need to make any redemptions.

Are Fixed Deposits Right For You?

If you have some spare cash just lying around, putting it into FDs can be a good way to grow your money without exposing yourself to investment risk.

Just be aware that early withdrawal of your FDs will likely incur penalty charges, and your interest earned will be prorated. These will have a significant impact on your returns.

Endowment Plans

Endowment plans are a type of insurance policy that helps you save towards a financial goal or future need.

They are often described as being similar to bank savings plans, but endowment plans are in fact very different. Once purchased, endowment plans require regular and consistent payments of premiums throughout the duration. (Unless you opted for a single-premium plan, which requires a lump-sum payment upfront).

You also cannot freely withdraw your money, and surrendering your plan early will incur stiff penalties; this can be severe enough to cause you to lose money, especially in the initial years of the plan.

As long as you continue paying your premiums, your endowment plan will accrue value over time that will (hopefully) exceed the sum total of the premiums you paid by the end. This is not guaranteed.

Another benefit is that you will receive life insurance coverage equal to the face value of the endowment plan throughout its duration. You may even be able to add riders to your endowment plan to obtain additional coverage, such as for critical illness, or personal accident.

Read Also: Best Endowment Insurance Plans Singapore 2024

How to Use Endowment Plans

If you are looking for a disciplined way to save money, can commit to paying premiums over a long time horizon, and could use some insurance coverage along the way, an endowment plan may meet your needs.

Note that while an endowment plan will help you save towards a financial goal, they are not as liquid as other types of investments.

Also, returns are not guaranteed, and your returns may be lower than the projections shown in your policy documents. In extreme circumstances, you may even end up with a final payout that is less than the sum total of your paid-up premiums (in other words, a capital loss).

Are Endowment Plans Right For You?

Endowment plans are made for extremely long time horizons, so perseverance and discipline is key. Once subscribed, the terms of an endowment plan cannot be changed, so you’ll need to ensure you can afford the premium payments no matter what.

Be sure to understand thoroughly how an endowment plan works — especially its restrictions and penalties — before committing to one. You should also take with a grain of salt any projected returns dangled in front of you.

If you’re unsure of your ability to keep up with the payments, try going for a shorter-term plan, or reduce the amount of your monthly premiums.

The Earlier You Start Investing, The Better

When it comes to building your investment portfolio, the earlier you start, the better. This is because of the power of compounding interest, which causes your money to grow at a faster rate the longer you invest.

Even a conservative investing strategy will see a significant jump in total returns, just by adding a head-start of a few years.

Start building your investment portfolio with the best online brokerages in Singapore. Find out which brokerage offers the lowest fees, the highest number of trading markets, or the widest ranges of investment products.

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