T-Bill Singapore

Treasury bills are currently trading above 3% p.a. providing a good arbitrage opportunity for Singaporeans to invest using their CPF OA for higher returns.

Back to our calculation, there is no change in the interest received from the 6-month T-bill. The CPF OA rates are reviewed every quarter, and if the interest rates were revised higher next year, we might even choose to leave our money in our OA account. For example, the next auction is for the BS22121F 6-Month T-bill, which closes on 27 October 2022. CPF members below 55 years old can earn an extra 1% interest or up to 5% on the first $60,000 of their combined balances (capped at $20,000 for OA). That’s a total of seven months of lost interest on our OA savings. But, in reality, the interest earned might differ due to how the CPF interest is computed and credited into our accounts. The first is the transaction charge of $2.50 for each transaction, which includes every purchase, sale and interest received. We can invest in T-bills under the CPF Investment Scheme (CPFIS) using our OA and SA savings upon setting aside $20,000 and $40,000, respectively. Previously, in a low interest rate environment, the floor rate was attractive as it was higher than the rates on government securities like T-bills and SGS bonds. With the latest T-bills auctioned in October 2022 yielding above 3.7%, it presents a unique opportunity to earn higher returns on our CPF OA savings. However, we also have to consider that investing in T-bills is an arbitrage opportunity rather than a long-term strategy. It’s no secret that interest rates are rising globally because of the United States’ hawkish policy on interest rates to arrest its high inflation.