T-bills still popular among Singaporeans
Although its returns have dipped, many Singaporeans still turn to T-bills to invest their spare cash. These are debt securities issued and backed by the Singapore government with a maturity of 6 months or a year. They are issued through an auction process and investors can apply through POSB, DBS, OCBC, and UOB ATMs, as well as through Internet banking.
Investors interested in T-bills increased last year as its yield rose, peaking at 4.4% in December.
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Despite the demand fluctuating between 3.65% and 3.93%, demand remains strong, with the 11 May auction receiving S$12 billion in applications for the S$5 billion offer.
According to Eugene Leow, DBS senior rates strategist, he expects to “see a semblance of stability as (the) market gravitates towards a Fed pause.”
Another analyst, Shawn Sng, said that T-bill yields have peaked and will unlikely go back above 4%.
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“We can expect them to hover around the current mid-3% range or even slightly lower,” he said. “Once the Fed decides to cut interest rates, we should see a more pronounced decline in T-bill yields.”
Experts say that although there’s still value in low-risk options like T-bills, investors should be more selective with their investments as their yields decline since there is little benefit to holding on to very low-yield savings for the long term.
Analysts are also urging people to hold cash, although not too much.
“The first piece of advice I would give investors is to build an emergency fund,” stated StashAway CEO Michele Ferrario.
“Last 15 months have been tough for markets and no one can know for sure what the year ahead may look like.”
Before investing, Singaporeans must get an idea of their own risk appetite, and diversify their investments. Ferrario also advised people to not time the market. Instead, they should make regular investment contributions to smooth out market volatility.
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