SG Saving Bonds Part II: Asset Allocation


No one knows when the ‘big one’ (major stock market crash) will come. Expert themselves are divided. But when it comes, no one wants to be completely caught on the wrong side with their assets in a single basket. I’m inclined to think that the crash or a major correction will happen sooner rather than later as it has already been about 10 years since the last crash (September 2008). However it’s not a good practice to ‘time the market’ either. This is when asset allocation comes in. 

SM Crash 2
History has, and will repeat itself. It’s only a matter of time

These are already some signs/indicators pointing to a looming stock market crash:

  • Rising bond rates
  • Institutional and retail investors in over leveraged positions (borrowing more than they should, resulting in high debt levels)
  • Trump’s trade war
  • Various negative world events which could spark panic selling

There are many other indicators that I’m not privy to. The main idea is to be prepared, so that when a crash does come, we’ll be in a position to benefit from it.

bear bull
When the market turns bearish, are you prepared, or will your finances end up being mauled?

Fixed Deposit/Bonds

Only until recently, investors had only fixed deposits (FD), regular government or company bonds to choose from. Fixed deposits requires one to commit to a fixed time frame. Common time frames range from months to years.

The interest given range from bank to bank and the interest rate given depends on the duration. Government and company bonds on the other hand can be traded on the secondary market (e.g. SGX). I don’t have much experience in this area except for the time I locked up AU $20,000 in an Australian bank when I was studying in Perth. The FD interest rate (If I recall correctly) was around 5%. In Singapore, we’re not fortunate to get that kind of returns but our borrowing interest rate is also lower than Australia.

SSB as a holding platform

In my first post on SSB (click here ), I mentioned that that the bonds were over subscribed because of the relatively high interest rate (1.42%) offered. Since then, the rates haven’t abated. Let’s look at the starting rate for the past few months:


  • April: 1.42%
  • May:  1.65%
  • June: 1.65%
  • July: 1.68%
  • August: 1.78%


Aug 2018 rate
Starting rate: 1.78%

As you can see, the rates have increased, making it a decent platform to hold cash in the short to medium term.

There are other places to hold cash apart from SSB. However, I favour SSB over other forms due to a few reasons:

  1. Decent interest rate
  2. Triple A rated bond
  3. Can withdraw anytime without penalty
  4. Can put in ‘bite size’ pieces (multiples of $500)
  5. Easy to liquidate

However, as much as I favour SSB, I’ve also allocated in various areas to cater to all situations.

Areas I’ve allocated/diversified my assets to:

  • Cash (for emergencies)
  • Cryptocurrency (potential growth/learning from it)
  • Dividend paying stocks (to supplement expenses)
  • Life Insurance (cash value)
  • Miles (travel currency)
  • SSB (holding platform with interest)
  • Rare items (If I ever have to sell these items off, I must be in a sorry state)

Let’s discuss three major stock market scenarios:

Neutral (Stays the same)

If the market remains neutral, I’ll just happily collect dividends.

Uptrend (Bull Market)

If the stock market doesn’t crash, and reaches new heights, I’m poised to benefit from it as I’m vested, therefore, I won’t ‘miss the boat’.

Downtrend/Crash (Bear Market)

In this scenario, my stocks will definitely take a beating. However, because I invested in stocks that have decent fundamentals, I will just ride through the difficult period, whilst adding to my positions gradually (dollar cost averaging down). At this time, the SSB will come in handy by allowing me to free up cash in case of any emergencies or to buy solid companies (blue chips) on a discount.

This is a complicated subject to discuss and I hope to break it down even further in the months to come. Till then, I hope this post has been in some way beneficial to you! 🙂



Disclaimer: The writings in this blog are purely my view. They do not represent the Singapore government or any other institutions. Please do your own due diligence (dyodd) when investing




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