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Where do you see this?
On the SGS website (www.sgs.gov.sg) and in newspaper articles.
What does it mean?
Singapore Government Securities (SGS) are debt instruments issued by the Singapore Government and can be in the form of Treasury bills (T-bills) or bonds. The minimum investment amount is $1,000, and you can invest in multiples of $1,000. You can use your CPF savings.
T-bills are short-term debt securities that mature in one year or less from the issue date while bonds have maturity of two, five, seven, 10, 15 or 20 years. Bond holders will receive fixed interest payments and the Government must pay the principal sum on the maturity date of the securities.
The Monetary Authority of Singapore announced recently that investors can now apply for SGS via the ATMs of DBS, OCBC and UOB.
In the past, retail investors had exposure to SGS only through money market funds, primary dealers like the three local banks, or secondary dealers such as stockbrokers.
Why is it important?
SGS can give a higher yield than bank deposits, given that its annual yields range from 0.35 per cent to 2.58 per cent for its one-year T-bill to the 10-year bond.
POSB savings and passbook account holders get just 0.125 per cent for the first $50,000.
While fixed deposits can potentially give a higher yield than SGS, the latter has the potential for capital appreciation which fixed deposits cannot offer.
The value of SGS is inversely related to the interest rate. If interest rates go down, SGS prices will typically go up because they pay what is now a comparatively higher fixed interest rate. Also, SGS are considered safe investments as they are backed by the strong financial standing of the Singapore Government.
So you want to use the term. Just say...
'I want my money to work harder for me so instead of putting my money in bank deposits, I'm going to invest in Singapore Government Securities.'
Gabriel Chen
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