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Using CPF-OA for 4% T-bills in January 2023.

Wednesday, January 18, 2023

I applied for both 6 months T-bills this month.

The first one had a cut-off yield of 4.2% p.a.

The second one had its auction today.

Cut-off yield at 4.0% p.a.

My non-competitive bid was fully filled.

I continue to add to the bond component of my portfolio. 

I am using dividends from my investments and also some money from maturing fixed deposits to do so.

Today, I also applied for the 1 year T-bill which, unlike the 6 months T-bills, is only offered 4 times a year.

Source: MAS

The auction results for this month's 1 year T-bill will be announced on 26 January.

Why did I apply for the 1 year T-bill?

I didn't plan to do it but I had to meet my banker at the bank to collect Chinese New Year notes.

It is the usual once a year visit to the bank for me.

Then, I thought I might as well apply for the 1 year T-bill with my CPF-OA money.

I mean I was already at the bank.

Not having to join a long queue at the bank also helped in making the decision to make the application in person easier for me.

As it is costlier and still more troublesome to use CPF-OA money to apply for T-bills, a 1 year T-bill is also more attractive than a 6 months T-bill, everything else being equal, I feel.

I will very likely lose an additional 2 months of CPF-OA interest income but as long as this 1 year T-bill cut-off yield is not too low, I will get some extra pocket money.

Yes, I know, the money can only be in my pocket almost 4 years from now when I turn 55.

This is a reason for accounting for my CPF interest income separately and not lumping it together with my yearly passive income updates.

The interest earned isn't money I can utilize right away.

It isn't near money.

Still, nice to have, I guess.

Moving money from the CPF-OA into T-bills doesn't do anything to my investment portfolio in terms of the bonds to equities ratio, of course.

It just means that my CPF account which I consider part of my bond holdings will get a slight boost.

How much might this boost be?

Well, let us assume I moved $200,000 and the 1 year T-bill cut-off yield was 4% p.a.

Doing a back of the envelope calculation, 1 year CPF-OA interest income would have been $5,000.

4% p.a. 1 year T-bill would yield $8,000.

So, might be grossing $3,000 more.

However, as I probably would not get any interest income from the CPF-OA for an additional 2 months, I would lose another $833 in CPF-OA interest income.

So, the net gain might be closer to $2,166.

For a whole year and with a relatively large sum of $200,000, I don't think the gain is a big deal.

Of course, if we were to move a sum twice or thrice as much, in absolute dollar terms, it might be more interesting.

If I did not have the kind of money I have in my CPF-OA and if I had to join a long queue at the bank, I don't think I would have bothered to make the application.

I know some people are pretty sensitive about this topic.

I hope I did not offend anyone by saying this.

Just me talking to myself, of course.

Anyway, will wait for the auction results now.

Hopefully, my application is fully filled or else the cost would be even higher.

We are not risking a loss of 0.05% p.a. interest but 2.5% p.a. when we use our CPF-OA money.

So, going for competitive bidding makes better sense.

This is in case the unthinkable happens.

The unthinkable?

Imagine a large number of people placed their bids for a 2% p.a. yield and imagine if the cut-off yield was 2.01% p.a.

That would be a most stunning OMG moment!

Just thinking of the possibility is giving me an anxiety attack!

Don't play, play!

Having said this, I put in what I felt was a sensible bid and did not put in an extremely low bid.

I know some people are still waiting for me to say something else.

You want to know what was my bid?

I know.

AK shy lah.

OK, I tell you.

Higher than 3% but lower than 4%. 

Win liao lor!

Good luck to us all!


1. T-bill at 4.2% p.a. investor profile.
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Yv said...

Hi AK,

it's funny that I head to your blog first for fresh news update on the Tbills results before I go check on my own bank account. Got my allotment as I decided not to be too greedy and just go for non-competitive.

I am heading back to SG finally this year for CNY (after 2 years of COVID) and I might be able to put in my bid for the OA if it's still open :)

Rellangis said...

Ok... Let me guess.... it is 3.90% !

AK71 said...

Hi Yv,

Oh, that is funny. :D

Most of the time, I am lazy.

So, don't count on me being always timely. ;p

Yes, the non-competitive option has worked well enough for me so far.

I am guaranteed to get at least some of my application filled.

However, using money from CPF-OA, I really need my entire application filled.

Even the cost of a partial failure would be too high.

So, unfortunately, I had to go the competitive route and with a lower bid which would hopefully secure a full allotment.

Mental AK is feeling a little anxious now.

Crossing fingers.

If you are making an application for this 1 year T-bill, the last day to do it is 25 Jan, I believe.


Welcome back to Singapore. :D

AK71 said...

Hi Rellangis,

3.9% is higher than 3% and lower than 4%.

So, you could be right. ;)

I would be quite happy if the cut-off yield is 3.9%, to be honest.

Not greedy. :)

This feeling of anxiety while waiting for the auction result is torture.

I have never had this feeling using cash to buy T-bills. -.-"

Sandra said...

Yv is right 😆AK is very on the dot on T-bill results nowadays 🤣

AK71 said...

Hi Sandra,


Feeling the pressure here.

Must see doctor liao. ;p

SgFire said...

Hi AK, a ssh has offered to takeover Sabana

AK71 said...

Hi SgFire,

I have published my reply to your comment as a blog:
46.5c per unit for Sabana REIT.

Gong xi, gong xi. :D

SgFire said...

Gong Xi Fatt Chai to you too and what a way to usher the new year in with Volare offer

AK71 said...

Hi SgFire,

Kamsiah you plenty plenty. :D

However, I am inclined to hold on to my investment in Sabana REIT as I rather like the income it generates for me.

Alamak, how like that? -.-"

Yv said...

I just arrived back in SG yesterday night and came to the Bank this morning to apply for the TBill but they said the application date has closed yesterday. 2 working days required if using CPF apparently.

SgFire said...

Hi Ak, based on your response, keeping it is also a good plan as these SSH seems to have a long term view and plan for sabana.

AK71 said...

Hi Yv,

Ah, I see.

Two working days before the auction date.

It is the CNY long weekend too.

Get some CNY red packets from the bank for good luck! ;)

Welcome back to Singapore. :D

AK71 said...

Hi SgFire,

It is hard to say what these SSHs have in mind.

For example, IREIT Global saw one of its SSHs, AT Group, reducing its stake substantially half a year or so ago, if I remember correctly.

I am not a SSH but I know why I like IREIT Global and Sabana REIT and I am staying invested. :)

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