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We have both Singapore Savings Bond and T-bill allotment results today.
As I increased the amount of money for both, I was crossing fingers for a full allotment in Singapore Savings Bond and also a relatively good cut-off yield for the T-bill.
Getting a full allotment in Singapore Savings Bond would not only mean mission accomplished with regards to money meant for voluntary contribution to my CPF account in 2024.
It would also mean possibly locking in a 10 year average yield of greater than 3% per annum which we might not see again from a Singapore Savings Bond for some time to come.
This is a possibility with interest rates softening in recent months.
If I did not get a full allotment and if the 10 year average yield of Singapore Savings Bonds offered for the rest of the year should be lower than 3% per annum, then, I would have to do a voluntary contribution to my CPF account in the month of December later in the year.
Well, it seems that luck is on my side.
A total of $700 million was offered in Singapore Savings Bond but the applications within individual allotment limit totaled $697.2 million.
So, my application with a sum of $22,000 was fully allotted.
Mission to put $38,000 meant for CPF voluntary contribution in 2024 to work for a higher average yield is accomplished.
I will have one less thing on my mind and this makes me happy.
As for the 6 months T-bill, I have always placed non-competitive bids when using cash on hand since I am only a small timer.
Anyway, even a 3.65% cut-off yield would still be more attractive than fixed deposit rates offered by DBS, OCBC or UOB now.
The fact that the "interest" is paid at the start of the 6 months term means that the effective interest rate is actually higher too.
The latest auction's cut-off yield is 3.83% p.a.
This is a positive surprise as I had expected the cut-off yield to trend lower after the last 6 months T-bill's cut-off yield of 3.75% p.a.
This is doubly or triply good news for me since I had put in a non-competitive bid with a sum of $15,000 instead of $5,000 which I had originally planned to do.
My T-bill ladder is complete and the plan is to continue rolling funds from maturing T-bills into new T-bills as long as the front end of the yield curve remains elevated.
Make hay while the sun shines.
I am still on the path to preserving capital, believing that cash is not trash in the current environment.
With so many things that could go wrong in the world nowadays, it is probably not a bad idea to be slightly more defensive.
As an retiree investor for income, it gives me greater peace of mind to reduce beta or volatility in my portfolio.
This is done while ensuring that my investment portfolio continues to generate sustainable passive income for me now and in the future.
For sure, not everyone will find this path that I am on an interesting one as it is probably quite boring.
However, we can all come up with a plan to invest in bona fide income generating assets if we want to achieve financial freedom.
If AK can do it, so can you!
Related posts:
1. Update on saving for income.
2. CPF or Singapore Savings Bond?
3. Largest investments (4Q 2022.)
Bloggy Award
12 comments:
Hi Ak,
Been a while talking to u…
Boring yet proven method is one of the way to go…
To add color to our investing journey, one have to upskill our financial knowledge..
Option trading within my US portfolio is very rewarding…plus not boring hahaha…lot of excitement and satisfaction..
As the saying goes, many roads lead to one destination…
Cheers and Huat to all
Regards
Vincent
Hi Vincent,
Wishing you the best on your exciting trading adventures.
I will just be plodding along as always. ;)
Hi AK
Pleasantly surprised by the results. Submitted a non-competitive bid this time round, fully allotted. SSB was also fully allotted.
DBS Savvy seems good, but I don't have DBS account.
Hi Yv,
Congratulations on getting your T-bill and SSB in full! :D
You might want to start a DBS account when you are back in Singapore.
I think that we should have savings accounts with all three Singapore banks since SDIC only insures up to $75,000 per depositor per bank.
Reference:
What does SDIC cover?
I was disappeared to see that my voluntary contribution in last April 2022 was returned last week, a year later. I should have checked.
Hi AK - Why don’t you also consider money market funds like moneyowl wisesaver where the yield is higher than SSB and t-bills?
Hi LC,
Yes, that happens when we try to contribute more than is allowed.
It has happened to me before.
Reference:
CPF is a national PONZI scheme!
Hi Cindy,
Money market funds are possibly good replacements for savings accounts for people looking for higher yields for cash they want to keep near.
However, they are not insured by S.D.I.C.
Also, if we believe that interest rates will soften in the coming months, it is probably a good idea to lock in a higher interest rate with longer duration.
It is good that we have different tools for different goals.
Hi AK. Like you I got my SSB mission accomplished. Lol.
But got no money left to apply T Bill. If AK can do, I can't do it lah. Pocket not deep enough. Lol.
Hi Henry,
You don't be so modest lah.
Make AK paiseh like that. ;p
Now, I must ask myself what to do if SSBs in the next few months offer higher than 3% p.a. in 10 year average yield?
AK,
Have you considered making voluntary contribution into CPF and then purchasing Tbills? By doing that, you can apply for Tbills and earn higher interest than SSB for the short-term? If interest rate falls, you can always fall back the CPF 2.5%?
Hi K,
I did think of it but decided that it was far too troublesome.
Using CPF OA funds to get T-bills would also mean losing a month or two of CPF OA interest.
I would also have to remember to transfer the money from CPF IA to OA when the T-bill matures.
For money that is already in my CPF OA, I would do it and I did.
However, I wouldn't inject more money into my CPF account just to do this.
It is far easier to lock in a longer term 10 year average yield of greater than 3% p.a. through Singapore Savings Bond and be done with it.
Anyway, I am not working with large amounts of money here and the difference in expected return is probably very small.
After all, we are looking at a principal sum of only $38,000 per year.
So, I would prefer a method of increasing fixed income exposure that is less of a hassle.
AK is lazy. ;p
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