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6 Investments In Singapore That Provide Guaranteed Principal And Returns

If guaranteed principal and returns sound good, here are 6 types of investments that you should check out.


In a higher-for-longer interest rate environment, more people are leaning towards investments that are safer today. Moreover, financial markets can be adversely impacted by persistently high inflation and rising geopolitical uncertainties. However, there aren’t many investments that provide guaranteed principal and returns in Singapore.

For certain investments that claim to pay guaranteed returns, you need to weed out the potential scams – i.e. investments that sound too good to be true. You can refer to the MAS Investor Alert List, which provides a list of unregulated persons or companies as a first layer of check. Note that if a company is not on the list, it doesn’t mean that it is automatically not a scam.

One other thing to understand is that when you enjoy such safety in your investments and visibility in your investment returns, you need to be prepared to accept a slightly lower rate of return that is closer to the risk-free rate.

What Is Risk-Free Returns?

The risk-free return refers to a rate of return that you can expect to achieve even if you don’t take on any risk. Theoretically, there’s no such investment as there will always be some form of risk that we take on when making an investment.

We look at 6 types of investments that you can put your money into which provide a guarantee on both your principal and returns. This can be a good way for those who are extremely risk-averse or unsure about investing to get started. Such investments can also act as a springboard to start investing in riskier investments as you gain knowledge and confidence.

#1 Singapore Government Treasury Bills (T-Bill)

Treasury bills or T-bills are the shortest-term government securities available. A good proxy for the risk-free rate in Singapore is the returns that the government of Singapore, one of the few triple-A-rated economies in the world today, pays on its 6-month or 1-year treasury bills.

The latest 6-month T-bill issued in mid-April 2023 offered a cut-off yield of 3.75% per annum. The latest 1-year T-bill was offered in January 2024, and paid 3.45% – a slightly lower interest rate.

Treasury bills are typically useful for investors who are looking for very short-term investments of between six months to one year, without taking on much investment risk.

Read Also: Treasury Bills (T-bills): What Are They And How You Can Buy Them

#2 Singapore Government Bonds 

The Singapore government also issues longer-termed bonds, between 2 years and 30 years. These bonds typically pay higher returns than shorter-termed T-bills. With all things equal, a bond with a longer maturity is typically deemed to carry more risks than the same bond with a shorter maturity period. Nevertheless, it is also regarded as close to risk-free and hence offers a rate of return that is close to the risk-free rate as well.

However, in the current interest rate climate, shorter-termed bonds are paying marginally higher interest returns compared to longer-dated bonds.

According to the Yield Curve depicted on the MAS website, Singapore Government Bonds should be paying these rates. As you can see in the table below, the longer the bond term, the lower the yield would be – again, this is contrary to what the typical yield curve should look like.

Singapore Government Bond Term (Tenor) Yield (p.a.)
2 years 3.47%
5 years 3.33%
10 years 3.38%
15 years 3.30%
20 years 3.28%
30 years 3.21%

In September 2021 the government also issued the first tranche of its SINGA bonds to finance major long-term infrastructure projects, such as new railway lines, coastal protection projects and other infrastructure projects that will benefit current and future generations of Singaporeans. SINGA bonds are also considered Singapore Government Securities (SGS) bonds.  The Singapore government also launched a 50-year Green SGS bond in August 2022. These are considered as Singapore government bonds as well.

#3 Singapore Savings Bonds (SSB)

By now, you would have noticed a recurring theme. The safest investments that are most likely to guarantee your capital and your returns are bonds issued by the government.

First launched in October 2015, the SSB pays a step-up interest rate each year, up to the 10th year. What this means is that the bonds pay a lower return in the beginning years, and if investors do not redeem the bond, it continues to pay a higher rate each year, until the 10th year. This is primarily to recognise the fact that investors are holding the bonds for a longer-term.

Here is the rate of each SSB issue, if you held it for the full 10-year time frame, since its inception in October 2015.

SSB historical rates April 2024

In general, the SSB offers superior liquidity, allowing investors to redeem it at any point without worrying about its market price. This usually means that the SSB should pay out similar, but slightly lower, interest rates than comparable government securities that do not offer this feature.

As depicted in the chart above, the SSB interest rate yields was on a downward trajectory since December 2018, but have since climbed strongly along with the inflation rate and Fed rate hikes. The latest SSB issue in April 2024 is offering a 10-year yield of 3.06% p.a. If you hold the SSB for only one year, you can still earn 2.99%.

In the current interest rate environment, the 1-year SSB return is very close to the 10-year average return. This truly speaks to the “higher for longer” interest rate outlook.

Read Also: Complete Guide To Buying Singapore Savings Bonds (SSB)

#4 Fixed Deposits

Although not commonly referred to as an investment, fixed deposits offer you a way to earn better returns on your money rather than leaving it in a savings account or under your pillow. As a reference, the three local banks in Singapore are currently offering the following Singapore-dollar fixed deposit rates.

Bank/ Tenor 12 months p.a. 24 months p.a. 36 months p.a.
DBS 3.2% 3.2% 3.2%

 

UOB 1.5% 2.1% 2.2%

 

OCBC 0.5% 2.5% 2.8%

 

Of course, there are many other banks offering their own fixed deposit schemes as well as promotional rates which can be significantly better than the board rates. Many of them, including the three above, may come with certain conditions you have to fulfil to achieve the promotional rates.

Looking at the figures on offer, DBS is offering the best board rates on fixed deposits. It also certainly looks like OCBC’s board rates have not kept up with the other two banks. Do note that these are based on board rates, and individual banks likely offer promotional rates which may be more competitive.

In addition, deposits with all full banks and finance companies in Singapore are covered under the Singapore Deposit Insurance Scheme, insuring up to $100,000 of your deposits in each account. All full banks and finance companies in Singapore, a total of 37 are listed on the SDIC website, are members of the Singapore Deposit Insurance Scheme.

Read Also: Beginners’ Guide To Fixed Deposits In Singapore

#5 CPF Top-Ups

To earn better interest returns, you can also consider making CPF top-ups into your Special Account (SA) via the Retirement Sum Topping-Up (RSTU) Scheme. These funds are guaranteed by the Singapore government and offer a minimum guaranteed return of 4.0% p.a. Today, the Special Account interest rate has risen to 4.05%.

You can also make Voluntary Contributions (VC) into your Ordinary Account, Special Account and MediSave Account.

Moreover, the first $60,000 of your CPF monies, with up to $20,000 in your CPF Ordinary Account (OA), will earn an additional 1.0% p.a. in interest returns. This means your top-ups may earn up to 5.0% p.a. if you top-up your CPF SA in the early years.

You also stand to receive up to $8,000 in tax reliefs when you make RSTU top-ups into your CPF SA, as well as an additional $8,000 in tax reliefs when you make cash-ups into a loved one’s CPF SA. No tax reliefs are provided when you make Voluntary Contributions to your CPF accounts.

However, before you do this, you need to know that unlike the investments listed in this article, which can be sold or redeemed early (notwithstanding that you may lose some value when you do this), topping up your CPF SA is irreversible. You will only receive it once you hit 65 in the form of monthly CPF LIFE payouts, rather than in cash.

Read Also: What Would It Take For CPF Interest Rates To Increase Beyond 2.5% (For OA) And 4.0% (For SA and MA)

#6 Savings Plans

Savings plans, offered by insurance companies, especially those that are non-participating in nature, also guarantee your capital as well as returns. You should also note that savings plans that guarantee your capital but do not guarantee returns also exist.

When investing in a savings plan, you are typically required to lock-in a lump sum investment over a fixed period or make regular contributions over a fixed period. Not adhering to the terms and conditions of these policies may see you lose a substantial amount of the returns you expected to receive. This is why you need to be sure of your liquidity needs for the funds you intend to invest.

These plans are also covered by the Singapore Deposit Insurance Scheme and may also offer an insurance component that pays out in the event something unfortunate happens to you.

Read Also: Singlife Account, Dash EasyEarn, Gigantiq: Which Insurance Savings Plans Gives You Higher Interest Rates And Better Benefits

Moving On To Investments With Greater Risks

Once you’ve built a foundation or started your investing journey, you will have more knowledge and confidence to make riskier investments – to earn potentially higher returns. Riskier, but still relatively safe, investments, such as cash management accounts and/or Corporate bonds may provide a competitive return for your spare cash while still providing a high degree of liquidity.

As you progress in your investing journey and understand that taking calculated risks over the long term can be financially lucrative, globally-diversified stocks portfolio, properties and other alternative investments may become investment options that can deliver significantly higher returns.

This does not mean you stop being prudent with your investments. On the contrary, you need to be even more prudent when you’re embarking on riskier investments. Many of these riskier investments are volatile and require you to be able to stomach, and ride out, wild price swings at times to earn good returns over the long term.

Read Also: Step-By-Step Guide to Stock Investing in Singapore

This article was first published on 16 January 2018 and updated to reflect the latest expected investment returns.

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