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3.75% p.a. cut-off yield for T-bill. Disappointing.

Wednesday, November 8, 2023

The results for the 6 months T-bill auction came out at 5pm or so.

I made a short video on this soon after.

In a nutshell, I was disappointed.

I did make a video a few days ago saying that we could see 3.88% p.a. based on the daily SGS prices and yields published by the MAS.

Of course, I didn't expect an exact match but 3.75% is even lower than the auction that took place one month ago.

That gave 3.87% p.a.




The last time it was lower was 2 months ago in September at 3.73% p.a.

Anyway, as I was using cash, I just placed a non-competitive bid.

This is so that I would get at least some of my application filled if there was a high level of interest.

Well, only 95% were allotted.

This means that if we had applied for $20K, we would get a refund of $1K.

To be fair, a cut-off yield of 3.75% p.a. is not bad.

It is still more than what most 6 months fixed deposits would pay, and if we consider the fact that the interest is paid at the start of the duration, it is actually more than 3.75% p.a.

So, disappointed I may be but not too much so.

Think positive!

Better for my mental health!




As for people using CPF-OA money, I always say to do competitive bidding because we do not want to be a victim of the unthinkable.

I have said in the past that a sensible competitive bid would be one that would not cause us to lose out on interest income in the end.

So, using CPF-OA money, the break-even is about 3.33% p.a. and since we should be aiming for more than breakeven, a competitive bid of 3.5% p.a. makes sense.

(3.33% p.a. takes into consideration the possibility of losing 8 months of CPF-OA interest.)

To be honest, unless the amount is significant, the difference in interest income is not going to be very meaningful.

I think this is not hard to understand.

So, I wouldn't be too worried if the amount of  CPF-OA money involved is, say, less than $50K.

So, until the next T-bill auction, it is back to my games.

If AK can do it, so can you!

SSB missions update! Redemptions! SSB I forgot I had!

Saturday, November 4, 2023

I don't usually look at my CDP statement these days because I really dislike looking at it online. 

So uncomfortable.

I miss the paper statements so much.

Yes, I know the argument for going green but I am not sure that going from chopping down trees to guzzling energy in data centers is a good trade or not?

After all, we can replant trees but unless we are using renewable energy, data centers are big polluters, if we think about it.

1. SSBs

Anyway, I had to check my CDP statement just to be sure that my paper records are accurate for Singapore Savings Bonds.

As it turns out, there was a Singapore Savings Bond which I thought of buying but wasn't sure if I could.

I blogged about it but it wasn't very clear.

See:
SSB 3.06% p.a. 10 years average yield.

Well, I could not find any trace of this in my CDP statement.

Blessing in disguise, maybe.

After all, this month's offer is for 3.4% p.a. 10 years average yield.




2. SSB redemption.

I am redeeming SBMAY23 which I did buy.

That offered a 3.07% p.a. 10 years average yield.

That was bought to partially replace CPF voluntary contributions in 2024.

See:
Saving for income 3.07% p.a.

Will use the funds to apply for SSB this month.

But the funds will only come back to me next month!

How like that?

I will have to use money in my war chest first and the returning funds will go back to my war chest next month.

Like I said in the previous blog post, AK can juggle money.

3. Forgotten SSB!

While going down the list of investments in my CDP statement online, I found an SSB that I forgot I had!

This was bought in 2018!

OMG!

10 year average yield of less than 3% p.a.

Alamak!

OK, I am redeeming that too.

The funds will go to my war chest next month.

More money for T-bills, maybe.




4. SSB mission for 2023.

Anyway, this is a blog post to remind myself of what I have done and what I am doing in the SSB space.

Mission accomplished in replacing VC to CPF with SSBs in 2023.

See:
SSB mission accomplished.

5. SSB mission for 2024.

For VC to CPF in 2024, I am (re)applying for SSB this month with funds from the redemption of SBMAY23.

Together with another SSB purchased in March, this will (re)complete the mission for 2024.

See:
SSB March 2023 3.15% p.a.

I thought of redeeming the SSB bought in March too but I have a feeling that the SSB this month is going to be oversubscribed as well.

So, I could end up being only partially allocated if I applied for a larger amount.

Anyway, my war chest doesn't like being depleted even if only temporary.

With yields at the long end of the curve rising, like I said in an earlier blog, there is no hurry to lock in higher yields.

Famous last words? Maybe.




6. SSB mission for 2025.

If I get what I apply for this month, it would be $15K of SSBs in total for the year 2025.

Since this is a mission for 2025, I have plenty of time to complete it.

Crossing fingers that 10 year average yields for SSBs will remain relatively high.

See:

SSB 3.16% p.a.

SSB 3.32% p.a.

SSB 3.4% p.a. (and 6 months T-bill ladder.)

If AK can buy SSBs, so can you!


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