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In my 1Q 2023 passive income update, I reminded myself that my portfolio was able to generate more income because I continued to put money to work.
Specifically, money was put to work in bona fide income generating assets.
I was also saving more money as it has become a more rewarding asset to hold.
Using 6 months T-bills to save money rewards me immediately as the "interest" is paid at the start of the tenure.
Although T-bills accounted for a very modest portion of passive income in 1Q 2023, this component was missing in 1Q 2022.
Having another source of meaningful passive income is not only pleasing, it makes for a more resilient portfolio.
There is also a very high degree of reliability as T-bills are not only risk free, they are volatility free if we hold them to maturity.
Indeed, we don't have to be investing for income all the time as saving for income is also a viable alternative.
Although it could not generate any income for me in 1Q 2023, I applied for Singapore Savings Bond (SSB) last month and my $16,000 application was fully allotted.
I did not apply for the latest T-bill as I had decided to prioritize the SSB towards the end of the month in March.
That T-bill had a cut-off yield of 3.85% p.a. which was higher than the cut-off yield of 3.65% p.a. in the preceding auction.
The plan is to continue applying for T-bills this month as a cut-off yield of 3.65% p.a. to 3.85% p.a. would still be relatively attractive.
The plan is also to apply for this month's SSB if it should offer a 10 year average yield of greater than 3% p.a.
I think the Monetary Authority of Singapore read my blog.
It seems like I will be applying for the SSB.
I should be able to set aside $10,000 for the SSB and also $5,000 per T-bill application this month.
Although some experts feel that interest rates have peaked, now, with OPEC cutting back on production to prop up the price of crude oil, the outlook could change.
I have been very consistent in saying that I cannot predict what might happen in the future but I know for sure I can prepare for the future.
As an investor for income, this means putting money to work in income producing assets while building a war chest for in case Mr. Market goes into a depression.
I am happy that cash is no longer trash and that there is another way for me to be paid while I wait.
Saving for income has become more rewarding and it certainly gives me peace of mind.
For a more a complete picture of how I have been generating passive income, please read the related post below, especially if you are a new reader.
Related post:
1Q 2023 passive income.
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4 comments:
Hi
I also plan to reinvest the T-bill which matured yesterday into an upcoming tranche.
Hi Yv,
I should have some money coming back too in the second half of the month.
Just nice for me to use that to apply for SSB and also the later T-bill.
T-bill laddering FTW. :D
Hi AK,
This current high interest rate environment is certainly good for seniors like myself who are adopting a more conservative posture with regards to investing.
I still remember vividly my hesitation at putting money into T-bill in Sep last year at 3.32% yield. It was my first exposure to T-bills. But after taking that very first step, the flood gate opened. The ease of online application certainly helps. We have used all manner of funds to invest in T-bills from cash to SRS funds to OA funds.
And so quickly, that first T-bill matured on 21 Mar 23 and the money was promptly deployed into Maybank FD at 3.9% for 12 months. The second T-bill matured on 4 Apr and the third will be maturing on 18 Apr. In fact, we have two T-bills maturing each month till Sep.
We will continue to park the cash and SRS funds into T-bills as long as the yield remains above 3%. For our OA funds there is less urgency to deploy the funds unless the T-bill yields are above 3.9%. But it has been a good period for conservative people with substantial cash hoard. That little interest income helps.
Hi mysecretinvestment,
Interest income was too miserable for too many years.
Being able to generate meaningful passive income from my savings now is a wonderful thing.
For now, I intend to continue growing my cash pile, parking in Fixed Deposits, T-bills and SSBs.
I don't have an urgency to invest aggressively for income since cash is no longer trash.
Also, there is the fact that I am already substantially invested.
I will enjoy the current situation while it lasts. :)
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