Jan 29, 2018

Cory Diary : Treasury Bills , Low Return Safe Havens

Equity is a practical way to generate good returns for myself being a "kaisu" of me. However "kiasi" of me, no matter how good equity is, I need emergency fund and reserve fund for my property installments if I am unemployed permanently.

After maximizing Singapore Saving Bond ( SSB ) in the range of 2%+, I start to explore ways to optimize my cash other than fixed deposits. One way is Government Treasury Bills which I can apply locally through internet banking easily. The recent allocation is 1.35%. For people who is unfamiliar, here's the information I tried to get from the web. So dyodd. Easy money for me !

Treasury Bills

When I applied say $50K, the gov pays me for this example 1.38% returns for 1 year tenor bill, $690 ( coupon ) upfront immediately into my saving account ( below table ). After one year, they return $50K back to me. Internet application through internet banking account is a fly. MAS has done a good job in this area.

MAS Auction Result

There are few other things to know before applying.

1. Competitive and non-competitive bids.
As individual investor, use non-competitive. What this mean is that I will be allocated whatever the auction result is, to make my life simple. Is like a blind bid. So far I know, the return coupon is reasonable.

2. Government Security
Treasury bill is one of government security. So is safer than bank

3. Returns
Much better than Fixed Deposit for similar terms.

4. Coupon Payment
"Interests" are paid upfront. Principal return to you after period is up. Do note carefully the lockup term.
(You can sell in secondary market but could be a hassle to explore)
(Treasury bills are sold at a discount to face value, and the investor receives the face value when the T-bill matures)

5. Priced Local Dollar
S$ exposure when applied Singapore Gov Treasury Bills.

6. Quarterly Application
Bidding is open only on certain date quarterly

7. Tax
" Capital gains are not taxed in Singapore, and SGS interest income accrued to individual investors is currently exempt from tax. Furthermore, for all SGS issued after 28 Feb 1998, interest on SGS earned by non-residents who do not have any permanent establishments in Singapore is also tax-exempt. "

This is good place for parking money temporary as war chest as part of portfolio allocation. Is also a good way to have them tuck here for my property installment reserve.

This is Not emergency or immediate fund which I can tap. For long term, this is nowhere near CPF which maybe much better, and consideration of higher allocation for legacy and retirement needs.

Recently, I heard about Maxigain from Citibank which I can get 2% after lock up period like a year with some fine prints. I will research later.



  1. Hmm so is it really locked up for 1 year?

    Or can sell off in secondary market? Of course it will be at discount since there is no more coupon payments, and the next buyer will just get back par on maturity e.g. $50K.

    So if allowed to trade in 2nd market, then I guess how much can sell depends a lot on short-term interest rate expectations e.g. if short-term rates going up then buyers will expect bigger discount than 1.38%

    Hmm is my understanding correct?

    1. Is my bad. You can sell in secondary market but could be a hassle. T-Bills are typically 1 year or less so basically I did not research this further.

  2. From ..

    Nice, rare to find an updated write up on T-Bills. Application for T-Bills via POSB does not incur the $2 application fee unlike SSB. I feel that t-bills is good for those who want to have higher interest rates, shorter tenure and don’t have $100K to deposit for 1%+ rates. Me too vested in T-Bills

  3. Just use United SGD Class A. Average return of 3% nett annual fees. No lockup. Get back your money within one week. Buy through POEMS or Dollardex. Avoid FSM as they will charge you platform fees which POEMS and Dollardex does

    1. thanks. I will explore this as well !

    2. Be aware that United SGD fund has been stagnating & very slight decline since Nov 2017.

      Although it's a short duration fund with effective weighted duration of less than 2 years, but it has significant amounts of Chinese bonds. With the rising yields of short-term "investment grade" govt paper, demand for riskier debt has tempered.

      Caveat: I've been out of United SGD fund since early Nov 2017, and switched into money market fund with annualized yield of 1%.

      My investment technique for using United SGD for the past 8 years is to trade it using a relatively short-term moving average, switching as needed into MMF. With zero switching costs this technique is a breeze to catch the almost 3% yield when things are moving in its favour, & sidestepping when it is weak.

      Regarding SSBs, don't be surprise to see future offerings having higher interest rates, as central banks around the world continue their tightening.

    3. Avoid FSM as they will charge you platform fees which POEMS and Dollardex does not.

    4. The chinese bond exposure is a concern. Not going to risk my fund.

  4. Thanks for sharing .

    Do u know where to find the historical t bill yield?

    Trying to see what's the impact on a blind bid and wonder how low it can go.

    Min is 50k?

    Also , how did u get your SSB as 2%? U intending to hold to 10 years?

    Since inception,the average yield for the earliest is say 1.6 about only.

    1. I think minimum 1K, sorry i did not remember but surely not that high.

      The 2.x% is for 10 years. Since limits is 100K I may hold it to max for my property installment reserve unless there are much better rates offered later by SSB.

    2. Average return per year, %. So longer you hold, the higher the average.

  5. https://secure.sgs.gov.sg/fdanet/TreasuryBillPricesAndYields.aspx

    I guess one can judge the floor or worst case rate based on the Oct 2018 maturity issue

    1. Yes, you can use that link for reference.