Senior Business Correspondent For more than two years, Treasury bills have been the go-to option for conservative investors looking to cash in on high interest rates, but the compensation for holding and rolling Singapore Government Securities is waning as yields soften.
Singapore T-bill yields are likely to fall further over the next six to 12 months, with the US Federal Reserve widely expected to embark on a series of rate cuts, says Mr Lui Chee Ming, head of investment advisory, onshore Citigold private client at Citibank Singapore.
The cuts could happen as early as September, financial experts say.
Singapore's interest rates broadly follow the direction of US rates.
Prudent investors should start exploring how to manage reinvestment risk, which is the possibility that their cash cannot be invested at the previously attainable rate, they say.
T-bills are short-term Singapore government bonds with six-month or 12-month maturities. You buy them at a discount, and receive the full face value of the bill upon maturity. These risk-free securities have gained in popularity among many retail investors in Singapore since 2022 as their yields climbed along with the rate hikes in the United States.
While most banks were offering near-zero base interest rates for savings accounts then, the cut-off yields for the one-year T-bill hit 3.7 per cent in October 2023, and the six-month T-bill, 4.07 per cent in September 2023.
The yields have since eased.
The cut-off yields for the oneyear T-bill issued on July 30, 2024 was 3.38 per cent, and 3.13 per cent for the six-month T-bill issued on Sept 3, 2024.
If you have been investing your Central Provident Fund Ordinary Account (CPF-OA) savings in Tbills via the CPF Investment Scheme, do take note of the potential risks of investing your CPF balances in T-bills when yields are falling, says Ms Lorna Tan, head of financial planning literacy at DBS Bank.
Bu hikaye The Straits Times dergisinin September 15, 2024 sayısından alınmıştır.
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Bu hikaye The Straits Times dergisinin September 15, 2024 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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