BS22125T 6-Month T-bill
In case for people who are not following the latest T-bill news,
The latest T-bill is out for application with the deadline of 20 December 2022, 9pm and the Auction Date 21 December 2022. Please remember to apply latest via internet banking (Cash and SRS) or in person (CPF) by 20 December 2022. For those who want to apply using CPF-OA and CPF-SA funds, please go down in person to our local banks (DBS, OCBC or UOB).
I have posted the above before in this post (https://careyourpresent.com/market-update-red-and-how-much-would-the-yield-be-for-the-next-bs22125t-6-month-t-bill/)
The deadline is tomorrow for those who want to take part!
What are Competitive or Non-Competitive bids?
I have some questions from people asking what are are Competitive or Non-Competitive bids? Which one should they choose during the application?
From the Treasury Bills website itself:
If you wish to invest in the bond only if it yields above a certain level, submit a competitive bid. You can specify the yield you are willing to accept in percentage terms, up to 2 decimal places.
Note that you may not get the full amount that you applied for, depending on how your bid compares to the cut-off yield.
Tip: A lower yield represents a more competitive bid, as you are indicating that you will accept a lower interest rate. You can submit multiple competitive bids.
In a non-competitive bid, you only specify the amount you want to invest, not the yield. Choose this if you wish to invest in the bond regardless of the return or are unsure of what yield to bid.
Non-competitive bids will be allotted first, up to 40% of the total issuance amount. If the amount of non-competitive bids exceeds 40%, the bond will be allocated to you on a pro-rated basis. The balance of the issue amount will be awarded to competitive bids from the lowest to highest yields.
You will get the bond at the cut-off yield, which is the highest accepted yield of successful competitive bids.
What does this mean in simpler wordings?
If you choose non-competitive bid, you have to put in the amount that you want to invest in the treasury bill. You will be allocated at the cut-off yield based on the auction results. In another word, for example if you put in 10k using non-competitive bid, if there are some unexpected auctioning results where many of the bidders only bid 2%, and the cut-off yield is 2%, you have to take up your 10k (assuming you are allocated everything) at that 2% despite the low rate.
However, if you choose competitive bid, you can specify the amount that you want to invest in the treasury bill and the yield that you are willing to take in. This means that if you bid 4.3% for 10k, and if the cut-off yield is 4.2%, you will get nothing with all the 10k refunded. If the cut-off yield is 4.4%, you will be given XXk at 4.4% depending on how much you have been allocated in the auction.
If you search around, many of the general advice is to pick non-competitive bid if the investor are not really sure how the auction process works.
However, my advice is to to pick competitive bid to prevent any unexpected auction results from happening where you are given very low yield (such as the example above). The worst case if you get everything refunded and use you can use your funds somewhere else rather than stuck in super lower yield treasury bill. This scenario is unlikely, but who knows? Previous previous cut-off yield was 3.9% oversubscribed whereas last cut-off yield was 4.4%?
What yield should you put in for competitive bid?
Let’s do a comparison on the alternatives.
Upcoming Treasury Bill is for 6 months, for fair comparison we should compare to 6 months Fixed Deposit. The highest now is 3.95% for CIMB (see below).
In my previous article (Best places to put Liquid Cash now), the comparable alternative would be MoneyOwl Wisesaver. The current yield is 4.2% p.a.
Do note that this rate is the gross indicative yield of the underlying cash fund, which may fluctuate as market and economic conditions change. It does not indicate the return you get for holding your investments for a year. We will update this rate periodically as the yield changes
It is investing in Fullerton SGD Cash Fund – Class A (SGD) which invested mainly in SGD Fixed Deposit and backed by Temasek. MoneyOwl itself is under NTUC income. It is as safe as you can get!
Insure, invest, or do a financial planning with MoneyOwl and get welcome Grab credits when you join using my referral link/code. I’m already a happy MoneyOwl client, you should check it out too!
You can use my referral link (or key in 6SHU-93MC) to get free $20-$60 Grab Vouchers when you invest with them. Moreover, there is a promotion until 31 Dec 2022 now where you can get $20 worth of WiseSaver units by 31 January 2023 if you open WiseSaver Account.
Let’s compare – The Conclusion
As above, the highest fixed deposit for 6 months now is 3.95% for CIMB whereas 4.2% p.a. for MoneyOwl Wisesaver.
With the fact above, if I am going bid for the upcoming Treasury Bill, I will use Competitive Bid and put the bid as:
- at least 4% if I want a higher than 6 month Fixed CIMB Rate (if I don’t believe WiserSaver can maintain 4.2% of higher going forwards)
- at least 4.2% if I believe that the interest rate will remains high under current FED policy such that MoneyOwl Wisesaver will maintain 4.2% or more (which I think will happen, given that the underlying Fullerton Funds invest in FD itself).
Good articles that you should read!
People are drawn to dividend investing.
Why? Firstly, dividends provide a regular stream of income, allowing investors to receive a portion of the company’s profits on a periodic basis. This can be particularly attractive for individuals seeking consistent cash flow or looking to supplement their existing income. Additionally, dividend investing is often viewed as a more stable and predictable investment strategy compared to relying solely on capital appreciation.
I always write and share articles, especially on dividends which many people love them. Do read them!
- Simplified Guide to the Key Gist of Grant of Probate and Estate Planning
- Cheapest and best way to trade Singapore Stocks with CDP
- Mastering Dividend Investing: 5 Evergreen Investment Principles
- Unlock Lucrative Returns with IAPD: A High-Yield ETF Providing 7% Annual Yield and Quarterly Payouts
- Unlock Lucrative Returns with SDIV: A High-Yield ETF Providing 11% Annual Yield and Monthly Payouts
- If I am a dividend investor, this is what I would do….
- 7 Things to consider before buy a dividend stock
- 4 Dividend ETFs that can let you sleep well even in the scary bear market
- 5 Best Counters for Passive Dividend Investing
- The Three MOST Important Traits of an Investor
- What is the best investment strategy in the world?
- Ultimate Strategy of buying REITS: XXX instead of X000?
- Ultimate Free 2 Days Reit MasterClass: Exclusive at Careyourpresent.com only!
Alternatively, you can go the right side of my page, there is a search bar where you can simply search “dividend” to see all my articles related to dividends!
Of course, you can search for other things that would interest you such as “Careyourpresent”, “Reits”, “Side Hustles”, “Fixed Incomes”, “Savings” etc.
Money just buy you the chance of freedom.
When you are young and working, you exchange time for money. When you are old, you can have lots of money but you can’t buy time back, especially the things that you have missed while busying striking out in career. Of course, if you love your career, and consciously know that you are missing out the first time your child walk or talk, that’s ok, but if you are the other spectrum, please do something about it.
Your kids grew up and they no longer need you to accompany them. They no longer want to sit on your lap to share/do things with you…all these time you spent in your 9 to 6 or even longer cubicles…can the money that you have earned by you back these?
We always thought we have more time with our old parents, but we are wrong. Time with them is ticking away every day. One day it will suddenly be gone. There is no regret medicine, no reset in time. Gone is gone and cannot come back. No matter you are billionaires or millionaires, you cannot reset this.
We always thought that we have more time with our spouse every day, but we are wrong. One day they will be gone too. When you read this, please go tell your spouse that you love him/her and he or she is the best thing that you ever had in your life.
I have picked out some of the more life reflecting articles of the CAREYOURPRESENT series. Do read them:
- The Best Advice to Parents and Child
- What if Later never come?
- What will you bring with you on your last day on Earth?
- Time is the ultimate currency, not money
- Our Life only have 5 short Days – we should live the best for every day
- Truly understand Living in the Moment now
- 11 Important Unexpected Life and Money lessons to learn from Your Children
- The days are long but the years are short
- Ditch your mobile phone to build real life
- Careyourpresent: Time is the most important
- Careyourpresent: What is your purpose of life?
- Careyourpresent : Greatest Regrets in life
- Careyourpresent : You might not believe it. It’s little unexpected things that make up a real life
- Careyourpresent: Something only happen once in life, if you missed it, it’s gone forever…
- Careyourpresent : Why is Gold useful?
- Careyourpresent: Frozen. Let it go!
Love your life daily.
You have one less day with your spouse, parents, children and yourself.
Time is ticking away.
For each passing day,
Enjoy and Treasure your Life!
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- Ebooks and other useful resources on enhancing productivity (Investment, Excel, Notion etc). Currently most of it are free at this moment (subject to change).
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