What is T-bill in Singapore?
Treasury Bills (T-bills) are short-term debt securities issued by the government to raise money. Singapore’s government issues T-bills through the Monetary Authority of Singapore (MAS). In short, Treasury bills (T-bills) are government bonds paying a fixed interest rate and typically maturing in six months or one year.
It differs from SGS bonds in that you are not paid with coupons. T-bills are instead bought at a discount to the par value and redeemed at maturity for their full value.
Investors can purchase T-bills in Singapore through participating banks and financial institutions. T-bills are considered a relatively low-risk investment, as they are backed by the full faith and credit of the Singapore government. However, their returns are generally lower than other investment options such as stocks or corporate bonds.
How do T-bills work?
If you’re interested in investing in T-bills in Singapore, you should consult with a financial advisor or contact a participating bank or financial institution to learn more about the process and requirements.
The return on T-bills is determined by the prevailing interest rate on the market. Because they are considered to be risk-free investments, the interest rate on T-bills is typically lower than other types of investments with higher risk, such as stocks or corporate bonds.
T-bills are highly liquid investments that can be easily bought and sold on the secondary market. They are often used as a benchmark for short-term interest rates and as a safe haven for investors during times of market volatility.
In any case, you won’t know the actual interest rates until the auction results are announced. Unlike SSBs, where we will be told the exact interest rate, T-Bills are auctioned, and yields are determined at that time.
For investors seeking a short-term investment option, T-bills are low-risk investments that provide reliable income.
If you’re a beginner looking to invest in T-bills, here’s what you can do:
Open a brokerage account:
Investing in T-bills requires opening a brokerage account. Purchasing and selling T-bills is possible online via many brokers.
Understanding how T-bills work is important before investing in them. Short-term government debt securities, or T-bills, are considered to be one of the safest investments available.
Choose the right T-bill:
Different maturities are available for T-bills, ranging from a few weeks to a year. If you have an investment goal and a time horizon, you should choose a T-bill that is appropriate for you.
Place an order:
After you have chosen a T-bill, you can place an order through your brokerage account. In order to invest in T-bills, you will need to specify the amount and maturity date.
Monitor your investment:
Investing in T-bills is a low-risk investment, but you should monitor your investment to make sure that everything is progressing well. Upon maturity, your T-bill will be redeemed for the face value plus any interest accumulated.
The process of investing in T-bills is relatively straightforward, and it is a good way for beginners to get started. Keep in mind, however, that T-bills offer lower returns than other types of investments, and they may not be suitable for everyone.
Yields on historical T-bill benchmarks
By looking at the MAS website‘s historical data, we can approximate the rates roughly!
The latest data at the time of writing is as follows: Benchmark yield of 6-Month T-bill as of 7 Feb 2023: 3.90% p.a.
Singapore Treasury Bills: How Do I Buy Them?
Before applying, make sure you have the following:
A bank account with any local banks in Singapore (DBS/POSB, OCBC, or UOB)
Central Depository (CDP) account that is linked to the bank account you intend to invest with
A CPF Investment Account with one of the three CPFIS agent banks (DBS/POSB, OCBC, and UOB) for CPFIS-OA investments (no account needed for CPFIS-SA investments).
An SRS account if you are using funds from your SRS.
How to Buy (New) T-bills at Auction? What Is the Best Way To Invest in T-bills?
You can apply for a T-bill through two methods:
Apply at an ATM (only DBS/POSB, OCBC, or UOB) near you, OR
Apply through Internet Banking under Singapore Government Securities.
Note that there is a $2 transaction fee (waived if you apply through DBS).
Use the internet banking portal of your SRS operator (DBS/POSB, OCBC, or UOB) to apply
CPFIS: Can I Use My CPF To Buy T-bills?
Apply at your respective CPF Investment Scheme (CPFIS) agent bank (DBS/POSB, OCBC, or UOB).
Agent banks charge a one-time fee of $2.50 per transaction and a quarterly service fee of $2 per counter. The total fee for investing in T-bills with your CPF Ordinary Account is $6.50.
How to Buy (Old) T-bills
Dealer Banks (Secondary Market)
The primary dealer banks (DBS/POSB, OCBC, and UOB) are also able to sell T-bills besides auctions. You can even get a higher return by purchasing older T-bills!
T-bills aren’t your thing? You might want to consider investing in gold instead…
Advantages of investing in gold:
Inflation hedge: Gold has historically held its value over time, so you can protect your purchasing power.
Safe haven: When economic uncertainty or market volatility are present, gold can be a good safe-haven asset.
You can potentially grow your wealth by investing in gold and stocks, but they have different characteristics and are suited to different investment goals and risk levels.
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