Applying For Singapore T-Bills: Why You Should Only Apply On The Last Day

This article is republished with permission from Dollars And Sense .

26-Mar    Share!

In tandem with the rise in global interest rates, the popularity of treasury bills (T-bills) has soared. On top of paying attractive interest returns, T-bills also help shield investors from the stock market volatility - while still paying a guaranteed return, and guaranteeing our investment.

We can invest in T-bills using our cash, CPF OA savings and SRS savings to earn a better interest return. When investing in T-bills, we should pay close attention to the key dates. These are all listed on the MAS website.

Auction Dates of 6-month T-bills

Source: MAS

(In this example, we use the 6-month T-bills; All 6-month T-bill stats used in the article is taken from the MAS website.)

For example, in the table above, we can see the:

#1 Announcement Date: We can start applying for the T-bills on this date.

#2 Auction Date: The auction results will be released on this date. Often, we can apply for the T-bills up to 1 to 2 business days before the auction. We need to check with our bank for the exact cut-off time.

#3 Issue Date: When the T-bills are issued to us (and we start earning the interest return). This is 3 business days after the Auction Date.

#4 Maturity Date: The date when a particular T-bills issuance matures. This is 6 months or 1 year after the issue date of the respective 6-month and 1-year T-bills.

Each year, these key dates will be released by October/November for the following year's T-bill issuances.

Some writers on the DollarsAndSense team have invested in the T-bills, and we think it makes the most sense to apply only on the last day of the auction.

Read Also: Treasury Bills (T-bills): What Are They And How You Can Buy Them

Don't Lose Out On Additional Interest Returns Elsewhere

Typically, when we use our cash to invest in T-bills, our funds will be taken out of our accounts immediately. If we were to invest on the last day of the auction (i.e. usually 1 day before the auction date), our funds can continue earning interest returns for a few more days within our high-interest savings account.

This amount of lost interest may become more significant if we are using our CPF OA savings to invest in T-bills. While we may know that our CPF OA savings earn a floor interest of 2.5% per annum, what some may not know is that we only get paid interest on our lowest balances in the month.

 CPF Interest Rates

Source: CPF

This also means applying for the T-bills at the start of the month is more sensible than at the end of the month.

For example, if we had wanted to invest in the T-bills announced on 26 Jan and 23 Feb, we should ideally apply in February and March respectively - rather than do it earlier.

Recent T-bills Auction Dates

Another way to think about this is that we can plan our applications to coincide with good timing to apply. For instance, maybe we should avoid using our CPF to invest in the upcoming auction on 30 March and 25 May.

If we do invest in these with our CPF OA savings, we would lose the entire 2.5% interest on those funds for the respective months.

T-bills that are coming up

While these amounts may not seem like much, they are still additional interest we could have earned. And, if we are investing large sums of money, they can also be quite sizeable.

Take Advantage Of Having More Information To Make Your Decision

If we wait till the last possible day to invest, we will also be armed with more information about the economy and interest rate environment.

Already, we have seen that multiple strong banks, such as Silicon Valley Bank and Signature Bank, can fail within a few days and without warning. Within 48 hours between 8 to 10 March, Silicon Valley Bank went from a prestigious start-up bank to being taken over by US regulators.

Upcoming T-bills Auctions

If we had invested in the T-bills on 9 March, rather than waited till the last possible date, we may have inadvertently lost some opportunities. Perhaps, we may have wanted to invest in depressed bank stocks, or even kept up-to-date with information of a potential slowdown in interest rate hikes - and not want to invest in T-bills this round.

This actually led to the lowest cut-off yield for this year - and we may have been able to avoid investing if we did not want to.

No. Auction Date Cut-Off Yield
1 18 Jan 2023 4.0%
2 02 Feb 2023 3.88%
3 16 Feb 2023 3.93%
4 02 Mar 2023 3.98%
5 16 Mar 2023 3.65%
6 30 Mar 2023 to be announced on 30 Mar

We can also stay updated with when potential news that may affect interest rates will be released. For example, the US Bureau of Labor Statistics release its employment report on the first Friday each month. We may wish to avoid or look at these statistics before investing in T-bills.

US Bureau of Labor Statistics employment reports

Source: US Bureau of Labor Statistics

For example, the labour report that was released on 10 March 2023 may have impacted your decision to invest in the March T-bills issuance.

Upcoming T-bills Auctions

In another scenario, we may also wish to wait till the Fed has delivered its updates on interest rates after its Federal Open Market Committee (FOMC) meeting.

 FOMC meetings US

Source: Forbes

The content from these meetings may shift our position to invest in T-bills. We can already see that in November and December, there may be T-bills issuance that are announced before the FOMC meeting, but only close after it.

Nov and Dec T-Bills Auction

Read Also: Singapore Treasury Bills (T-bills): What Is Cut-Off Yield, Median Yield, And Average Yield

Take Note Of When You Can Start Using Internet Banking To Apply For T-Bills With Your CPF Savings

While it's understandable that we may want to wait till the last minute, we shouldn't leave it too late.

If we want to use cash and SRS to invest in T-bills, we can simply use their respective ATMs or internet banking platforms.

However, if we want to use our CPF OA savings, only DBS currently enable us to invest via its internet banking platform. OCBC's internet banking platform will be live from 31 March 2023, while UOB's internet banking platform will be live only from 22 April 2023.

Leaving it till the last minute, and realising that we have to go down to the bank in-person may mean we have to skip the latest issuance. We will also need to open a CPF Investment Account with one of the 3 local banks to do this.

 How to apply for T-bills

Source: MAS

Similarly, any other hiccups we face at the last minute can mean having to skip the latest T-bills issuance – and end up costing us at least 2 weeks of interest till the next 6-month T -bills issuance, and 3 months for the next 1-year T -bills issuance.

Read Also: Step By Step Guide To Buying T-Bills Online Using Your CPF OA Savings

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Contributed By: Dollars And Sense