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T-bill ladder still attractive, but when to dismantle the ladder?

Saturday, June 3, 2023

I will be producing a YouTube video based on this blog later today. So, if you like listening more than reading, you might want to wait for the video.


So, money from a T-bill that matured came in. 

I am going to recycle the money into the upcoming 6 months T-bill which will have its auction on 8 June which is next Thursday. 

Just keeping my 6 months T-bill ladder intact and not doing anything earth shattering. 

A higher proportion of fixed income will help me to reduce risk and volatility in my investment portfolio.

Having a T-bill ladder to create another source of passive income isn't a bad idea too. 

In my case, it is also really good for some regular extra pocket money.

I don't ever look down on risk free options to have some regular extra pocket money.

Might sound boring to many people but the T-bill ladder pays reasonably well while giving me peace of mind.

No point losing my sanity chasing after money.

OK, I admit. 

I am weak mentally.

Those who are stronger mentally, please don't let the talking to myself stop you from having fun.

On a serious note, I am a retiree and lack an earned income.

So, being more conservative financially makes sense to me.

A younger person who is gainfully employed can be a bit more adventurous.

Of course, there is nothing dreadfully wrong with younger people being more conservative financially as not everyone has an appetite for greater risk.

Just have to make sure our motivations and methods match well.

Anyway, the last 6 months T-bill auction had a cut-off yield of 3.85% p.a. 

I am hopeful that the upcoming T-bill auction will have a similar cut-off yield.

Yes, I can only hope since this T-bill auction is happening in the first half of the month, we could see more retail participation using CPF OA funds.

There could be some pretty irrational low balls.

Anyway, I shan't rehash. 

This is the link to the blog if anyone is interested in reading about the possibility:

6 months T-bill 3.85% p.a. cut-off yield is not good enough?

As for the Singapore Savings Bond offered this month, the 10 year average yield is 2.82% p.a.

This is just a very little bit higher than the 2.81% p.a. offered last month.

Fortunately for me, where Singapore Savings Bond is concerned, my mission for the year is complete.

So, is this something I am looking at just for fun?

Well, partly for fun.

I am also interested in monitoring this for a practical reason.

If the 10 year average yield should go above 3% p.a. again, I could bring forward the plan to inject funds into my CPF account in 2025. 

After all, the funds I have used to purchase Singapore Savings Bonds this year were earmarked for CPF voluntary contributions in 2024.

Unless interest rates for CPF OA and SA increase meaningfully, it still makes more sense for me buy Singapore Savings Bonds as long as their 10 year average yield is higher than 3% p.a.

Oh, I produced a YouTube video recently.

Please watch only if you want some comic relief and have a good sense of humor.

You have been warned.

Just talking (and giggling) to myself, of course.

T-bills are still offering more attractive yields than the CPF ordinary account. 

This is because the front end of the yield curve is still elevated. 

An inverted yield curve has historically been a pretty reliable indicator of a coming economic recession. 

This is another reason for having a meaningful exposure to fixed income. 

If a recession should hit, the equity market would likely see drawdowns. 

Then, I could dismantle my T-bill ladder to increase my exposure to equities.

If AK can talk to himself, so can you!

1. Fixed income update.
2. SSB or CPF? No brainer!


DL said...

Hi AK, do you submit a competitive bid in order to secure the interest rate that you desire for T bill?

AK71 said...

Hi DL,

For using cash on hand, I submit non-competitive bids.

I just take whatever cut-off yield is handed to me.

I only submit competitive bids if I am using CPF OA funds as I want to avoid the possibility of getting a cut-off yield which might be lower than 2.5% p.a.

X said...

Hi AK,

Just started reading your blog. Waaah, very addictive! I found myself looking forward everyday to new posts! Good to hear you talking out loud on Singapore stocks, you very experienced investor :)

Any chance you can train that analysis on US or HK stocks? ETF also can lol

AK71 said...

Hi X,

Welcome to ASSI. :D

Glad you are enjoying my blogs.

I have been pretty prolific in recent months after taking a break for a few years.

Anyway, just talking to myself here. ;)

Eh, no interest in US or HK stock markets, and no interest in training anyone in FA or TA.

I avoid anything that sounds remotely like work. ;p

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