The Best Investment Alternatives For T-bills in Singapore 2024

You may recall 2023 as the record high yields for T-bills – reaching an all-time high of 4.0%. Although the yields have slowed down, it’s still an attractive option for short-term investments. Those who acted quickly to lock in will likely benefit from promising returns over the next year or two. 

However, with these T-bills soon reaching maturity, a question arises. Should you still invest in T-bills or seek out new investment opportunities? If short-term securities are still your main priority, here are several options you can consider going forward. 

 

Got your eyes on T-Bills? Start like a pro with our other investment guides!  The Beginner’s Guide to Singapore Treasury Bills for Individual Investors 2024: What are T-bills and How to Apply Latest 6-Month T-bill Offers Cut-Off Yield of 3.40% Top 11 Frequently Asked Questions (FAQs) about T-Bills in Singapore

 

1. Singapore Saving Bonds (SSBs) 

SSBs, similar to T-bills, are a type of government-backed bonds that possess the highest credit rating of AAA. The rating indicates our country’s high level of financial creditworthiness, ensuring you will receive your money with minimal default risk. Apart from Singapore, only 11 countries hold an AAA rating, including Canada and Switzerland. 

Unlike T-bills where yields can fluctuate based on market changes, SSBs’ interest rates are set by the Monetary Authority of Singapore (MAS) to increase yearly, should you hold on for a 10-year duration. With the latest release of SSB (SBAUG24 GX24080W), here’s how much interests you can earn from a $10,000 investment:

Does that mean you have to park money for a decade? Of course not. 

SSBs allow redemption at any time. You will get the original investment plus interest earned up to the month you cashed out. However, you will receive a lower interest rate of 3.19%, should you stick for only 1 to 2 years.

Are SSBs right for you?

Out of the three government-issued securities, SSBs yield the lowest required minimum amount to invest, at only $500. SSBs also can’t be traded on the secondary market and are less likely to be affected by market forces. If you are an entry-level investor or with lower liquid funds, SSBs are one of the more accessible and risk-free options available. 

ALSO READ: Singapore Savings Bond (SSB) Review 2024—What are the Interest Rates and How to Buy

 

2. Fixed deposits 

A fixed deposit (also known as a time deposit) account is a type of bank account that offers guaranteed interest rates in exchange for holding your money for a set period. 

Fixed deposits are one of the most flexible securities out there, because of their brief maturity tenures. While T-bills last for only 6-12 months, fixed deposits can be kept for as low as one month. However, to get a better deal (such as 3.25% on a $10,000 investment), you might consider a slightly longer term of 6 months for your fixed deposit.

With T-bills’ yields standing at 3.74% and 3.58% as of July 2024, it’s best to compare against the rates currently offered by banks: 

• Syfe Cash+ Guaranteed (3.75% p.a.—3 or 6 months with no minimum amount)
• StashAway Simple Guaranteed (3.75% p.a.—3 months with no minimum amount)
• SBI (3.35% p.a.—min. $50,000 for 6 months)
• ICBC (3.40% p.a.—min. $500 for 3 months)
• Bank of China (3.50% p.a.—min. $500 for 3 months)
• CIMB (3.25% p.a.—min. $10,000 for 3 or 9 months)
• RHB (3.25% p.a.—min. $20,000 for 6 months)
• HSBC (3.20% p.a.—$30,000 for 3 or 6 months)

If you only want to deposit $10,000 or less, there are several options to consider: 

• CIMB (3.25% p.a.—min. $10,000 for 3 or 9 months)
• Bank of China (3.50% p.a.—min. $500 for 3 months)
• ICBC (3.40% p.a.—min. $500 for 3 months)
• DBS (3.20% p.a.—min. $1,000 for 12 months)
• UOB (2.70% p.a.—min. $10,000 for 6 months)

Are fixed deposits right for you?

Should you be keen on investments with shorter maturities, fixed deposits are right up your alley. Although, unlike T-bills, fixed deposits’ early withdrawal will likely incur a 0.5% to 1% penalty charge. 

Note: Some banks such as POSB and DBS will not allow you to withdraw on the day of maturity or 1 day prior to it, while ICBC lets you go without extra fees. So, understand your preferred banks’ guidelines before applying for your fixed deposit accounts. 

ALSO READ: Best Fixed Deposit Rates in Singapore (Jul 2024)—Rates Up To 3.7%, Minimum Deposits From $500

 

3. High-yield savings accounts (HYSAs) 

In contrast to fixed deposits, T-bills and SSBs, high-yield savings accounts may offer lower interest rates initially. However, you can earn much more by meeting criteria issued by your banks (e.g. crediting your monthly salary of at least $1,800, increasing your monthly balance by $500, or spending on related credit cards..). 

At the moment, some of the HYSA offerings are yielding higher interest than the fixed deposits, including: 

• Standard Chartered Bonus Saver —up to 7.68% p.a. 
• OCBC 360 Account —7.65% p.a. 
• Citi Wealth First Account —up to 7.51% p.a. 

Here’s an in-depth look at how interest rates fare should you meet your banks’ criteria:

Are HYSAs right for you?

First thing to note is, these highest rates are only achievable once you uphold all of the criterias set up by the banks. If you’re unable to meet such demands, here’s a more realistic view of what to expect for your investment:

While not as impressive as the <7% yields shown above, some HYSA rates are still higher than those of traditional savings accounts and remain competitive with current fixed deposit and T-bill rates. 

HYSAs will also come in with certain conditions and terms that may require multiple initial deposits and restrict the number of your withdrawals. As such, it’s worth reviewing the various requirements and determining which one you can sustain for higher returns. 

 

4. DigiBanks – New option to invest in?

Another emerging option emerging in Singapore is Digital Banks (like Trust+). DigiBanks are financial institutions that function entirely online and through mobile apps. This means no extra fees on physical branches, and no wasting time waiting for staff to attend to you. 

Instead, you can log into the bank’s mobile app for all your banking transactions. With a Trust+ savings account, the interest rate of up to 3.0% p.a, is on your first S$500,000 deposit balance – a cap higher than what is offered by most local banks. You can earn up to S$15,000 total interest in a year. 

Are Digibanks right for you?

As opposed to fixed deposits, T-bills, or SSBs, which lock your money in for a set period and incur fees for early withdrawals, Trust+ accounts provide full freedom in liquidity. You can withdraw whenever you need without fear of being penalised. 

Secondly, Trust+ requires no minimum balance, monthly, or fall-below fees that traditional banks typically charge.

ALSO READ: Could Trust+ Be Better Than Fixed Deposits or T-Bills?

FAQs

How to apply for & redeem SSBs 

Application for SSBs 

SSBs are open to apply for anyone from age 18 and above, although you must: 

• Have a bank account with at least one the major banks in Singapore & an individual CDP Securities account.
• Apply through DBS/POSB, OCBC & UOB ATMs or internet banking. SRS investors may apply through their respective SRS Operator’s internet banking portal
• For cash-based investments, the interest will automatically go into the bank account linked to your individual CDP Securities account.

SSBs (selling) redemption requirements

For early redemptions, submit your request through DBS, OCBC or UOB ATMs or iBanking. You can redeem the bond partially, in multiples of $500 and redeem more than one bond each time. 

The redeemed amount will then arrive by the second business day of the month after SBB withdrawal. You don’t have to worry about penalties for leaving early, though there will be a $2 transaction fee awaiting you. Here’s an overview of what will happen:

Can I use CPF to purchase T-bills or any of these investments?  

Yes, you can for T-bills and fixed deposits: 

CPF for T-bills 

You can apply for T-bills at your CPF Investment Scheme (CPFIS) agent bank (DBS/POSB, OCBC, UOB) or online if you’re a DBS, OCBC, or UOB customer. Banks will charge a one-time S$2.50 fee (excluding GST) per transaction and a quarterly S$2 service fee (excluding GST) per counter. 

Using your CPF Ordinary Account (OA) will cost S$7.09 after GST. Only CPF-OA can be used to purchase T-Bill, with several limitations – rightfully so, considering CPF is meant to contribute towards your retirement:

• T-bills must have a remaining maturity of at least 1 year.

• The total investment in T-bills and other non-guaranteed investments cannot exceed 35% of your investible savings.
• The total amount of your investment in T-bills, including other non-guaranteed investments and gold, cannot exceed 10% of your investible savings.

CPF for Fixed Deposits 

Meanwhile, you can still use CPF to purchase fixed deposits with any of the four major banks (DBS, Maybank, OCBC and UOB) under the CPFIS. If you are unsure whether your banks are offering CPFIS-supplemented fixed deposits, you can reach out to them and ask about the fixed deposits’ rates and placement processes. 

Note: Even if the fixed deposit bank you visit is not your usual CPFIS-OA agent bank, you can still place your fixed deposit there. 

 

Which is best for your investment in 2024? 

Whether you’re a first-time investor or looking to diversify beyond T-bills, these options highlight some of the safest and most flexible securities in Singapore. However, it’s still essential to develop a solid financial plan that accounts for your risk tolerance and capability in operating these securities. Carefully consider the pros and cons, and decide for yourself which is best suited for investments for this year. 

 

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