T-bills with CPF and SRS in March 2023.

So far, I have applied for T-bills mostly with cash, using mostly money from maturing fixed deposits.

As more and more money got locked up in T-bills as well as fresh fixed deposits with higher interest rates, I  reached a stage where I didn't have anymore cash to apply for T-bills.

Then, I found some money playing truant at home which I quickly put to work in T-bills in February.

Unfortunately, unless I had a money tree at home, it would be impossible to find more money playing truant at home.

I still want to continue getting T-bills in order to maintain a meaningful exposure to fixed income especially during this period of much higher yields.

Of course, until a few months ago, for many years, even as a retiree, I was doing voluntary contributions and top-ups to my CPF account to achieve this goal.

I have always thought of the CPF as an investment grade government bond which offered relatively attractive yields while having an annuity angle.

So, although it might seem like I have recently developed a fascination for fixed income, I really haven't.

It has always been an important part of my investment portfolio.

Anyway, I looked at how much money I might have left in my SRS account and CPF-OA as we can buy T-bills using money in these accounts.

My SRS account recently got a leg up as I sold my investment in SATS, booking a modest capital gain in the process.

My CPF-OA still has some $52K available for professionally managed products.

I will split the $18K available in my SRS account into 3 equal parts and apply for the 3 T-bills on offer in the month of March.

These would be non-competitive bids as I suspect that the cut-off yields for all the T-bills to be auctioned in the month of March would be much better than the SRS interest rate.

This is one prediction my bowling ball which thinks it is a magical crystal ball is going to get right, I feel.

Yes, I said to my bowling ball, "You win liao lor!"

The $52K available for investment in my CPF-OA, I will make a competitive bid for the T-bill closing on 1 March.

I am bidding very close to a 4% p.a. yield this round as I see inflation data coming in strong and also a strengthening US$ against the S$.

As the application is being made online, the cost really isn't that high like before.

Online application saves me a trip to the bank and, quite possibly, a long time in a queue.

It is very fortunate that DBS has made online application for T-bills using CPF-OA money available.

If successful, I would lose only an extra month's worth of interest income (i.e. for the month of March) from CPF-OA as the T-bill will mature in early September. 

This would give me ample time in the month of September to transfer the money from the CPF-IA back to the CPF-OA so that I would not lose another month's worth of interest income for the month of October.

In total, I would lose 7 months' worth of CPF-OA interest from March to September.

This is unlike the 1 year T-bill which I applied for in January using CPF-OA money.

For that T-bill auction, my bid yield was just a bit more than 3.4% p.a. as that was the interest rate OCBC offered for fixed deposits placed using CPF-OA money.

The cut-off yield for that T-bill was 3.87% p.a. which wasn't a bad outcome.

That 1 year T-bill started at the end of January 2023 and matures at the end of January 2024.

So, for that T-bill, unfortunately, I would lose 2 more months' of CPF-OA interest income for the months of January 2023 and February 2024.

Total of 14 months of CPF-OA interest income lost.

Just talking to myself about T-bills.

If you are new to eavesdropping on AK, please do not jump to the conclusion that this is all that we have to do to achieve a significant level of financial security and, ultimately, financial freedom.

For the vast majority of us, fixed income alone is not going to get us to financial freedom.

References:

1. CPF or SSB?
2. Have $10K? Invest or save?
3. Changes to portfolio (Feb 23.)