Many individuals seek secure avenues for wealth growth, particularly in the face of inflationary pressures that erode the value of savings held in traditional accounts. The desire for a low-risk investment that offers a reasonable return is a common financial goal.
In this article, we’ll explore what are Singapore Government Treasury Bills (T-Bills), explaining how they work, their benefits, how to buy these treasury bills, and how they can be incorporated into a sound investment strategy.
Table of Contents
- What are Treasury Bills (T-Bills)?
- How Do Singapore T-Bills Work?
- Why Should You Invest in Singapore T-Bills?
- How to Buy T-Bills in Singapore? (Step-by-Step Guide)
- Is Investing in T-Bills Right for You? Risks to Consider
- T-Bills vs Other Investment Options (Syfe Cash+, Fixed Deposits, SSBs)
What are Treasury Bills (T-Bills)?
Treasury Bills, or T-Bills, are short-term Singapore Government Securities (SGS) issued by the Monetary Authority of Singapore (MAS). Essentially, investors lend capital to the government for a defined period and receive a return in the form of interest. These short-term government securities are considered a highly secure investment because the risk of the Singapore government defaulting on its debt is extremely low.
- Short-term debt securities: T-Bills are designed for short-term investment horizons under a year.
- Issued by MAS: The Monetary Authority of Singapore manages the issuance of T-Bills.
- Government-backed: T-Bills are considered very safe as they are guaranteed by the Singapore government, which is stable and has an AAA credit rating.
- Low-risk investment: Due to government backing, T-Bills are considered a relatively low-risk option for investors.
- Return on investment: Investors earn a return in the form of interest.
How Do Singapore T-Bills Work?
Singapore Government T-Bills are purchased at a price lower than their face value and redeemed at the full face value upon maturity. The discount reflects the time value of money. A dollar today is worth more than a dollar tomorrow due to its potential earning power. By selling T-Bills at a discount, the government acknowledges this time value as the cost of borrowing. Meanwhile, an investor is willing to accept a lower price today in exchange for receiving the full face value in the future.
The minimum investment amount for MAS Treasury Bills is S$1,000, and subsequent investments must be in multiples of S$1,000. T-Bills offer tenures of 6 months and 1 year, allowing investors to select the ideal time horizon to suit their needs.
Features of T-Bills
- Discount mechanism: T-Bills are bought at a discount and mature at face value.
- Profit from difference: The difference between the purchase price and face value is the investor’s return.
- Minimum investment: T-Bills have a minimum investment amount of $1,000 and subsequent investments must be in multiples of $1,000.
- Tenure: T-Bills have 6-month and 1-year tenures.
Why Should You Invest in Singapore T-Bills?
There are several reasons why an investor might consider parking funds in Singapore treasury bills.
- Safety: Backed by the full faith and AAA credit of the Singapore government, T-Bills are considered virtually risk-free. This makes them a secure option for preserving capital.
- Flexible Tenures: With tenures of 6 months and 1 year, Singapore T-Bills give investors the flexibility to align their investment horizon with short-term financial goals, making them ideal for funds you might need in the near future.
- Accessibility: Learning how to buy T-Bills in Singapore is a straightforward process, making them an accessible investment option for a wide range of individuals. They can be a good introduction for beginners to fixed-income securities.
How to Buy T-Bills in Singapore? (Step-by-Step Guide)
Investing in Singapore T-Bills is a relatively straightforward process. Here’s a step-by-step guide outlining the common methods:
Through Internet Banking
- Access your bank’s internet banking platform.
- Look for the “Investments” or “Fixed Income” section.
- Choose “Treasury Bills” from the available investment options.
- Fill in the application form, specifying the amount you wish to invest. Take note that T-Bills in Singapore have a minimum investment amount of S$1,000.
- Review and confirm your application.
Through Your CDP Account
- Reach out to your brokerage firm that’s linked to your CDP account.
- Inform your broker of your intention to invest in T-Bills. They will guide you through the order placement process.
- Ensure you have sufficient funds in your CDP account or linked funding account to cover the purchase.
Using Supplementary Retirement Scheme (SRS) Funds:
- Confirm that your SRS account allows investments in T-Bills. Not all SRS accounts may offer this option.
- Reach out to your SRS operator (your bank) to inquire about investing in T-Bills using your SRS funds. They will provide the necessary instructions and forms.
- Complete and submit the required application forms to your SRS operator.
How to Check the Latest T-Bill Yields
You can check the latest Singapore government T-Bill yields at the MAS page on T-Bill information for Individuals. The page also provides information about upcoming auctions and past auctions, including the awarded yield.
T-Bill Yield Calculation
Investors can calculate the potential yield of a T-Bill with the following formula:
Yield = (Face Value – Purchase Price) / Face Value * (365 / Days to Maturity) * 100
Where:
- Face Value: The amount the investor receives at maturity.
- Purchase Price: The discounted price the investor pays for the T-Bill.
- Days to Maturity: The number of days until the T-Bill matures.
Let’s say you want to invest the minimum amount of S$1,000 in a 6-month (182-day) T-Bill. You purchase it at the discounted price of S$980. At maturity (after 6 months or 182 days), you will receive the face value of S$1,000.
Yield = (S$1,000 – S$980) / S$1,000 * (365 / 182) * 100 = 4.01%
Therefore, the annualised yield on this T-Bill is approximately 4.01%.
The Latest T-Bill Yields in Singapore
Singapore T-Bill yields are determined through a bidding process conducted by the MAS. The MAS announces an auction for a specific amount of T-Bills, and investors submit their bids, indicating the price they are willing to pay (which translates to a specific yield). The cut-off yield is the highest yield at which all the offered T-Bills are sold. This cut-off yield is crucial because it represents the return that successful bidders will receive.
High demand for T-Bills typically leads to lower cut-off yields (meaning higher prices), as investors are willing to accept a lower return to secure their investment. Conversely, lower demand can result in higher cut-off yields (lower prices) to attract investors.
For context, the cut-off yield for the latest 6-month T-Bill auction in Feb 2025 was 2.75% p.a.
Meanwhile, the cut-off yield for the latest 1-year T-Bill auction held in Jan 2025 was 2.95% p.a.
Is Investing in T-Bills Right for You? Risks to Consider
Singapore T-Bills can be a valuable part of a diversified portfolio, but it’s essential to assess if they align with your individual financial goals and risk tolerance.
| Pros | Cons |
| Virtually risk free as they are backed by the Singapore government with an AAA credit rating | Yields can fluctuate based on bidding activity in a particular auction. If interest rates rise, newly issued T-Bills might offer higher returns than those you currently hold. This means you could potentially miss out on higher returns if you hold T-Bills to maturity. |
| Decent returns with higher rates than typical bank savings accounts | You cannot redeem your T-Bills prior to maturity. If you want to sell your T-Bills before maturity, you can only do so at banks via the secondary market. However, the trading volume for T-Bills is relatively low, meaning you may not be able to sell the amount you desire at the value you want. |
| Flexible 6-month and 1-year tenures | Unlike usual bonds, T-bills do not pay interest periodically. You get the lump sum at maturity. This structure is not ideal for investors who prefer regular income. |
| T-Bill interest is not subject to taxation in Singapore, making it a tax-efficient investment. | If inflation rates rise significantly above T-Bill yields, the real return on your investment can be negative. |
Looking for a short-term investment alternative to T-Bills with better liquidity? Check out Syfe Cash+.
T-Bills vs Other Investment Options (Syfe Cash+, Fixed Deposits, SSBs)
For investors seeking a relatively low-risk investment option for short-term funds, Singapore T-Bills may be a compelling option. However, how do they compare with other popular low-risk investment options? Let’s take a look.
| Singapore T-Bills | Fixed Deposits | Singapore Savings Bonds (SSBs) | Syfe Cash+ Flexi (SGD) | Syfe Cash+ Guaranteed (SGD) | |
| What is it? | Government-backed debt security | Deposit in a bank for a fixed period | Long-term, government-backed savings instruments | Invests in high quality short-term money market instruments and debt instruments | Invests in fixed deposits with MAS-regulated partner banks |
| Return Rate (p.a) | 2.56% p.a. (6-Month T-Bill) | 2.00% to 2.90% p.a. (6-Month Fixed Deposit) | 2.85% | 3.2% | 2.6% (6-Month term) |
| Risk level | Virtually risk-free | Very low-risk | Virtually risk-free | Very low risk | Very low risk |
| Minimum and Maximum investment amount | $1,000, no maximum | Varies by bank | Minimum: $500 Maximum: S$200,000 | No minimum, no maximum | No minimum or maximum |
| Tenure | 6 months or 1 year | Varies, typically 3 months to 24 months | Up to 10 years | No lock-in period | 1 month, 3 month, 6 month or 12 month options |
| Withdrawal | At maturity | At Full withdrawal at maturity | Anytime | Can withdraw at any time | At maturity |
Source: Singapore T-Bill Rates (6-months) from MAS March 2025 T-Bill Auction Data as of 17 March 2025
Fixed Deposit Rates (6-months) from various bank websites as of 17 March 2025
Singapore Saving Bond Rates from MAS March 2025 Bond Issuance as of 17 March 2025
Syfe Cash+ Flexi rates from Syfe website as of 17 March 2025
Syfe Cash+ Guaranteed rates from Syfe website as of 17 March 2025
Rates are subject to change without notice. Please verify directly with the respective sources.
Looking for an alternative place to park your short term funds? Unlike T-Bills, Syfe Cash+ offers competitive returns on your cash and greater liquidity without having to apply and bid for T-Bills in auctions.
