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New 6-Month Singapore T-Bill (est. 4.0% Yield) Available on Auction Until 27th October 2022

A Singapore Treasury Bill issue will be auctioned on Thursday, 27th October 2022.

If you wish to subscribe successfully, get your order via internet banking (Cash and SRS) or in person (CPF) by 26th October. You can also apply with your CPF-OA and CPF-SA funds, but you would have to go down to a bank (OCBC, UOB and DBS) and do it in person. You can also apply the same issue with your cash and SRS.

In the past, I have shared with you the virtues of the Singapore T-bills, their ideal uses, and how to subscribe to them here: How to Buy Singapore 6-Month Treasury Bills (T-Bills) or 1-Year SGS Bonds.

In the last issue announced two weeks ago and recently concluded, the current t-bills were trading at a yield of 3.30%. In the end, the cut-off yield for the t-bill ended at 3.77%, which is vastly higher than expected.

If you placed a non-competitive bid, which most of us do, you would have gotten an attractive annualized yield of 3.77%.

Gaining Insights About the Upcoming Singapore T-bill Yield from the Daily Closing Yield of Existing Singapore T-bills.

The table below shows the current interest yield the six-month Singapore T-bills is trading at:

The daily yield at closing gives us a rough indication of how much the 6-month Singapore T-bill will trade at the end of the month. From the daily yield at closing, we should expect the upcoming T-bill yield to trade close to the yield of the last issue.

Gaining Insights About the Upcoming Singapore T-bill Yield from the Daily Closing Yield of Existing MAS Bills.

Typically, the Monetary Authority of Singapore (MAS) will issue a 4-week and a 12-week MAS Bill to institutional investors.

The credit quality or the credit risk of the MAS Bill should be very similar to the Singapore T-bills since the Singapore government issues both. The 12-week MAS Bill (3 months) should be the closest term to the six-month Singapore T-bills.

Thus, we can gain insights on the yield of the upcoming T-bill from the daily closing yield of the 12-week MAS Bill.

The cut-off yield for the latest MAS bill auctioned on 18 Oct (yesterday) is 4.25%.

Currently, the MAS Bill trades close to 3.98%.

From where the yield of where the current six-month T-bill and the twelve-week MAS-bill trade at, and the cut-off yield of the MAS-bill, I estimate that the yield on the upcoming six-month Singapore T-bill to be higher than 4.0%.

Here are your other Higher Return, Safe and Short-Term Savings & Investment Options for Singaporeans in 2022

You may be wondering whether other savings & investment options give you higher returns but are still relatively safe and liquid enough.

Here are different other categories of securities to consider:

Security Type Range of Returns Lock-in Minimum Remarks
Fixed & Time Deposits on Promotional Rates 4% 12M -24M > $20,000
Singapore Savings Bonds (SSB) 2.9% - 3.4% 1M > $1,000 Max $200k per person. When in demand, it can be challenging to get an allocation. A good SSB Example.
SGS 6-month Treasury Bills 2.5% - 4.19% 6M > $1,000 Suitable if you have a lot of money to deploy. How to buy T-bills guide.
SGS 1-Year Bond 3.72% 12M > $1,000 Suitable if you have a lot of money to deploy. How to buy T-bills guide.
Short-term Insurance Endowment 1.8-4.3% 2Y - 3Y > $10,000 Make sure they are capital guaranteed. Usually, there is a maximum amount you can buy. A good example Gro Capital Ease
Money-Market Funds 3.6% 1W > $100 Suitable if you have a lot of money to deploy. A fund that invests in fixed deposits will actively help you capture the highest prevailing interest rates. Do read up the factsheet or prospectus to ensure the fund only invests in fixed deposits & equivalents. MoneyOwl’s WiseSaver – Fullerton Cash Fund example.

This table is updated as of 17th November 2022.

There are other securities or products that may fail to meet the criteria to give back your principal, high liquidity and good returns. Structured deposits contain derivatives that increase the degree of risk. Many cash management portfolios of Robo-advisers and banks contain short-duration bond funds. Their values may fluctuate in the short term and may not be ideal if you require a 100% return of your principal amount.

The returns provided are not cast in stone and will fluctuate based on the current short-term interest rates. You should adopt more goal-based planning and use the most suitable instruments/securities to help you accumulate or spend down your wealth instead of having all your money in short-term savings & investment options.

If you want to trade these stocks I mentioned, you can open an account with Interactive Brokers. Interactive Brokers is the leading low-cost and efficient broker I use and trust to invest & trade my holdings in Singapore, the United States, London Stock Exchange and Hong Kong Stock Exchange. They allow you to trade stocks, ETFs, options, futures, forex, bonds and funds worldwide from a single integrated account.

You can read more about my thoughts about Interactive Brokers in this Interactive Brokers Deep Dive Series, starting with how to create & fund your Interactive Brokers account easily.

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Winnie

Saturday 29th of October 2022

Hi, if I buy a 6 month T bill, does it automatically expire at the end of 6 months without me doing anything and the cash will just be transferred to my bank account?

Kyith

Saturday 5th of November 2022

HI Winnie, yes that will likely be what will happen

Andy

Wednesday 19th of October 2022

Hi, What are your thoughts if you if we invest use CPFOA to invest 6 mths T-bills. We could lose 6 mths of OA interest and since it is 6 mths or more. The yield theorically be half. Does it make sense to invest 1 yr T-Bills will be a better choice and if the yield is favourable.

Kyith

Thursday 20th of October 2022

You will gain a higher interest. Typically, CPF accrue interest monthly and calculate based on the lowest amount in the month. So you will lose the interest for the month you put in and the month you get back. People say the hurdle rate is 3.3% roughly.

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