What should I do with my cash now?
Endowus Insights

Leap into prosperity this CNY 💰     Get an $88 head start to growing your wealth.

Leap into prosperity this CNY 💰Get a $88 head start to growing your wealth.

What should I do with my cash now?

May 2023
Nov 2022
  • Fixed deposits, T-bills, SSBs, and cash management solutions have their pros and cons. 
  • To preserve flexibility amid volatility, consider allocating in buckets if it suits. Ladder up and diversify for a stream of cash and income.
  • Count the true cost of using CPF funds for T-bills

With rising interest rates, savers and investors are shopping around for options as banks raise deposit rates, while government securities such as Treasury bills (T-bills) and Singapore Savings Bonds (SSBs) now offer higher yields.

So which is right for you? 

The reality is that with the wide choices available now, each option comes with its unique limitation. This means we’d need to understand the associated trade-offs and opportunity costs. Let’s take a closer look at the options to explain why it makes sense to consider allocating your cash into different savings and income options, rather than picking just one. 

What are T-bills?

It’s safe to say Treasury bills (T-bills) in Singapore have traditionally not been the sexiest investments — that is, until now. These are short-term Singapore government securities that the Monetary Authority of Singapore (MAS) issues on a regular schedule. According to the issuance calendar published by the MAS, 6-month T-bills are issued every 2 weeks. The 1-year T-bills are sold 4 times a year, though the last 1-year T-bills tranche this year was already auctioned off on 13 Oct 2022.

T-bills have been popular in recent auctions because the yields offered by these safe securities have been rising. The late-October auction for the 6-month T-bill had a cut-off yield of 4.19% per annum (p.a.), the highest since 1988.

Here are some key details you might find useful:

Singapore Treasury bills (T-bills)

Credit rating AAA; fully backed by the Singapore government
Minimum investment amount $1,000
Funding sources Cash, SRS, CPF funds
Fees Cash, SRS: $0
CPF: $6.78 for a 6-month T-Bill transaction
- One-time $2.50 fee
- Quarterly $2.14 service fee per counter, including 7% GST (note: 8% from 2023)
How the yield is determined T-bills are zero-coupon bonds, so they are issued at a discount to their face value, with investors receiving the full face value at maturity.

So if a one-year T-bill offers a 4% p.a. yield, you will in effect invest $960 (with $40 returned to your bank/SRS account as the discount). At maturity, you receive the face value of $1,000.

To participate in T-bill auctions, investors submit either a competitive bid or a non-competitive bid.
- Competitive bid: Bidding investors here, typically institutions, specify a yield. Only those who bid below or at the cut-off yield will be allocated T-bills at the cut-off yield.
- Non-competitive bid: Investors here only bid with an investment amount.

MAS allocates to non-competitive bids first, capped at 40% of the total issuance. The remaining 60% of the total issuance goes to qualifying competitive bids.

Should I put all my money in T-bills then?

Take note though that demand for T-bills now is so strong that the cut-off yield for the latest 6-month T-bills auctioned on 10 Nov was at 4% — lower than the record 4.19% yield from the prior auction.

It also meant that non-competitive bids, which are usually submitted by retail investors, were filled on a prorated basis. For the T-bill auction on Nov 10, a record of more than 95,000 bids worth $14.2 billion were submitted for an issuance size of $4.5 billion, far exceeding the bids received from the prior auction. The overwhelming demand created a reported 5-hour delay in the publication of the Nov 10 auction results.

Rates are rising as the US Federal Reserve has made jumbo rate hikes to tamp down record-high inflation, with one final Federal Open Market Committee (FOMC) meeting this year due in December.

But while investors may be tempted to “time the market” and plough in all their cash later in the year to capture the most yield, it is important to understand how the T-bill auction is conducted to understand then how the yield is derived. 

When investors putting in competitive bids expect higher demand, they are likely compelled to bid at relatively lower yields in order to better their odds of securing an allocation. This is because MAS allocates to the lowest yielding competitive bids first and moves sequentially up on the competitive bids until the whole issuance size is taken. 

This pricing process determines the cut-off yield for T-bills, and that downward pressure can push the final cut-off yield lower than that of the previous tranche just two weeks prior, as we’ve seen in the latest auction result. The latest 6-month T-bill yield therefore demonstrates that surging demand can instead bring down the yield, counterintuitive as it may be to the expected trend of rising rates. 

With the latest US inflation print still high but coming in less hot than expected, the Fed may also turn relatively less hawkish and dial down on jumbo rates in the coming months. So it is certainly true that the yields have risen, but there is less certainty in the yields always going up at each auction, especially in the weeks ahead.

This means there is a greater lack of predictability over the final T-bill yield that you will get.

More broadly, investing in 6-month T-bills locks in your funds for that period, albeit for a short time. It is difficult to trade these securities, so investors should assume that these funds are meant to be held till maturity.

If you plan to use these funds for a large purchase, such as for a home, or for redeployment into other investments such as stocks, bonds, or alternatives, setting large sums aside in T-bills will create an opportunity cost that you should be aware of and consider with care.

Investors should plan out their holistic investment plans to look at longer-term investments. If they need to keep some dry powder or liquidity on the side to execute on these plans, say 3 months later, they might be caught out if all their funds are locked up in T-bills for 6 months.

Should I queue to buy T-bills with my CPF savings?

It is once said that queuing is one of Singapore’s national pastimes. In recent times, you may have seen snaking queues at banks.

This comes as many investors are keen on using their CPF funds to buy T-bills, as the T-bill yields have easily gone beyond the CPF Ordinary Account (OA) interest rate of 2.5% p.a. Online bids on T-bills are currently only enabled for bank/SRS funding. (The other reason for the long queues would be to secure fixed deposits, which we will also discuss.)

But first, on CPF and T-bills. With CPF funds set aside and not available for withdrawal until retirement age, it is understandable that investors are looking to find a better way of growing these savings that are meant for retirement. 

But there are two matters to consider. Firstly, is this effort an efficient use of time? Secondly, is it an efficient investment? 

As the adage goes, time is money. Anecdotally, investors who want to use CPF funds to buy T-bills have queued for hours at the bank. 

As for whether it is an efficient form of investment, there are opportunity costs to calculate. For one thing, savers can lose more than 6 months of CPF interest. As ChannelNewsAsia reported, to participate in a T-bill auction at the end of October, you would have to put in a bid before the auction date (27 Oct). Since the T-bill was issued on 1 Nov, and matures 2 May next year, that means there would be 8 months during which the CPF-OA funds do not earn interest. 

Subtract out the fees, and an investor who placed $10,000 in the end-October 6-month T-bill tranche from his or her CPF-OA savings will earn excess interest of $35.45. 

Given the fees and opportunity costs, it would also naturally be harder to earn beyond the interest rate offered on the CPF Special Account (SA) funds. The SA rate is currently 4% at the time of writing, but will increase to 4.01% for the period from 1 July 2023 to 30 Sept 2023.

As for Singapore Savings Bonds (SSBs), the December issue is offering a record 1-year return of 3.26% p.a, and a record 10-year average return — though one that is not dramatically higher than the 1-year return — at 3.47% p.a. While not directly comparative with SSBs, note that the last 6-month T-bill offered a yield of 4% p.a. The difference though, is that SSBs can be redeemed easily at a fee of $2 per transaction, and the minimum sum is $500. There is therefore more flexibility, but that comes with a lower yield. Note also that there is a cap of $200,000 for SSB investments per investor.

T-bills Singapore Savings Bonds (SSBs)
Tenor 6-months; 1-year 10-year; option to redeem at $2 fee
Cut-off Yield/Interest 10 Nov auction – 4% p.a.
(note: T-bills are zero-coupon bonds)
1 Dec issue —
1-year return: 3.26% p.a.
10-year average return: 3.47% p.a.
Minimum investment $1,000 $500
Maximum investment None; at each T-bill auction, an investor can submit up to $1 million in non-competitive bids. $200,000
Redemption/trading options Secondary market trading can be done at main branches of the 3 local banks.
(note: subject to market/liquidity risk)
Investors can redeem SSBs in any given month before the bond matures. There is no penalty for exiting your investment early; there is a $2 transaction fee charged by the bank for each redemption request.

Redemption opens at 6pm on the 1st business day of the month, and closes at 9pm on the 4th last business day of the month. Redemption operating hours are 7am to 9pm, Mon to Sat (excluding PHs)
Fees Cash, SRS funds: $0
CPF funds: $6.78 for a 6-month T-Bill transaction
Cash, SRS funds: $2 transaction fee for each application
CPF funds: N/A

Read more: How do Singapore Savings Bonds (SSBs) work?

Should I leave all my money in the bank then?

Banks have been raising their deposit rates in recent times. But savers need to look closer at the advertised headline numbers. For example, with OCBC’s 360 account, the rate advertised is an eye-watering “up to 7.65% a year”. But these savings accounts tier the interest rate based on how much you transact with the bank in both products and deposits.

For instance, a 4% p.a. interest rate is only paid on the next $25,000 savings after the first $75,000, so that means that the effective interest rate for your first $100,000 is actually 2.5%, assuming you just credit a minimum monthly salary of $1,800. You’d also need to use and/or buy products such as insurance and credit cards to be entitled to higher savings rates.

To be absolutely clear, $75,000 of your savings held by each bank is insured by Singapore Deposit Insurance Corporation, or SDIC. Emergency savings, in particular, should be safely held at banks that offer such deposit guarantees. 

All we are saying is that savers should be clear about the terms and conditions that allow you to generate the highest headline interest rates. Simply put, not everyone will qualify.

As for fixed deposits offered by banks, note that you’d have to lock in at a rate with a larger sum, and typically for at least a year. This is unlike with SSBs and T-bills, where the minimum sum is relatively smaller. A lower investment entry level allows you to systematically ladder up in a rising interest rate environment — a rinse-and-repeat process in which you buy, hold, and reinvest these government securities offered per tranche.

Watch our webinar replay: Ask Your CIO: All about T-bills, fixed deposits, SSBs, Cash Smart, and bonds

How about cash management, income solutions?

If relevant to you, you may consider cash management products, though it should be clearly noted that these are not capital-guaranteed. For example, the yields of Endowus’ Cash Smart Secure have been rising, and the Endowus platform allows investors to redeem their funds from their cash management portfolios at no additional cost. For investors who want flexibility, having no lock-in restrictions is a perk. The projected range of returns for Cash Smart Secure for the end of October is at 2.8%-3.1% p.a.

The underlying fund managers of Cash Smart portfolios invest in Singapore government-issued bonds, which are often institutional tickets that could offer better returns than SSBs, by comparison. MAS bills are common underlying securities. Short-term cash management accounts at platforms such as Endowus provide for the best of both worlds by providing daily liquidity and higher yields, while continuing to allow investors to benefit from rising interest rates that are reflected in the funds over time.

As another option, the Fullerton SGD Cash Fund is now projected to offer a 3.56%* yield, while the Fullerton USD Cash Fund is at a projected yield of 3.54%*. The Fullerton SGD Cash Fund comprises high-quality, institutional bank deposits and government bills, with a very short duration spanning  20-30 days in 2022. *based on the respective 5-day moving average yields

It is also worthwhile looking at how you are investing beyond low-risk cash management products that do not beat inflation rates. Investors should look at their long-term commitments at hand, and can consider putting money into investment-grade bonds that are also rising in yields, or in global stocks that have hit new lows in 2022. Endowus has a whole suite of portfolios — ranging from advised Income Portfolios and Flagship Portfolios, to tactical options provided on our Fund Smart platform — curated for investors to make their cash savings work harder for a more comfortable future. 

The bottomline: ladder up and diversify for a stream of cash and income

For longer-term income For low to no risk savings For emergency savings
- Endowus Income portfolio*
- Bond funds* via the Fund Smart platform
- T-Bills**
- SSBs**
- Cash Smart Secure
- Bank savings***

*not capital-guaranteed
**backed by the Singapore government
***$75,000 held per bank is insured under SDIC

It is indeed time to work your cash harder, as high inflation erodes more of our purchasing power quicker than before. With the choices available today, savers and investors need to understand the various trade-offs that each option provides — typically in the form of flexibility and transparency in this volatile rates environment. An optimal way to sort through the options is to diversify your cash holdings across different products and solutions. 

With rising interest rates and slowing growth, investors should also look beyond cash management to consider how they can generate income. This environment should prompt a closer look at fixed income — an investing universe that goes beyond government securities — especially if you are a long-term investor. 

In a rising interest rate environment, investors can buy bonds through a laddering strategy. With this, investors earn income from high-quality credit (i.e. both government bonds and investment grade bonds issued by corporations) and use the income and money from maturing bonds to reinvest into fresh bonds that will pay a higher coupon. This way, you can generate better yield in a rising rate environment from similar or better-quality bonds without taking as much risk.

Source: PIMCO

Professional bond investors do this systematically and they can also use tools such as hedging to spread out risk and reduce cost. Bond funds also allow for greater diversification benefits by giving investors exposure to hundreds of bonds from different countries and sectors, while managers are able to reinvest the proceeds from redeeming older bonds into new instruments with higher coupon rates or better prices.

Investment amounts in such unit trusts tend to be small enough to lower the hurdle for all retail investors, whereas a single corporate bond in Singapore is typically priced in a large denomination of at least $200,000 with costly transaction fees.

Looking for passive income in this investing environment can feel a little daunting in these times. But remember to not just diversify your cash savings solutions according to your more immediate needs and priorities, but to also keep your long-term financial planning goals in mind. Seek out diversified portfolios or funds, then commit to a regular investment plan through a dollar-cost averaging strategy

At the end of the day, the current pain reflects that from the scourge of inflation, caused today by a complex mix of factors. But your investing journey today should still be aimed at bringing peace of mind, so you can be unencumbered by the noise and rest easy. 


Investment involves risk. Past performance is not necessarily a guide to future performance or returns. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested. Rates of exchange may cause the value of investments to go up or down. Individual stock performance does not represent the return of a fund.

Any forward-looking statements, prediction, projection or forecast on the economy, stock market, bond market or economic trends of the markets contained in this material are subject to market influences and contingent upon matters outside the control of Endow.us Pte. Ltd (“Endowus”) and therefore may not be realised in the future. Further, any opinion or estimate is made on a general basis and subject to change without notice. In presenting the information above, none of Endowus Pte. Ltd., its affiliates, directors, employees, representatives or agents have given any consideration to, nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Therefore, no representation is made as to the completeness and adequacy of the information to make an informed decision. You should carefully consider (i) whether any investment views and products/ services are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances. You may also wish to seek financial advice through a financial advisor or the Endowus platform and independent legal, accounting, regulatory or tax advice, as appropriate.

Investment into collective investment schemes: Please refer to respective funds’ prospectuses for details of the funds, their related fees, charges and risk factors. The listing of units of the fund on a stock exchange does not guarantee a liquid market for the units. Before making an investment decision, you are reminded to refer to the relevant prospectus for specific risk considerations.

For Cash Smart Secure, Cash Smart Enhanced, Cash Smart Ultra: It is not a bank deposit and not capital guaranteed, and is subject to investment risks, including the possible loss of the principal amount invested. Investment products are not insured products under the provisions of the Deposit Insurance and Policy Owners Protection Schemes Act 2011 of Singapore and are not eligible for deposit insurance coverage under the Deposit Insurance Scheme. Interest rates are indicative and subject to change at any time.

Product Risk Rating: Please note that any product risk rating (the “PRR”) provided by us is an internal rating assigned based on our product risk assessment model, and is for your reference only. The PRR is subject to change from time to time. The PRR does not take into account your individual circumstances, objectives or needs and should not be regarded as advice or recommendation to purchase, hold or sell any fund or make any other investment decisions. Accordingly, you should not solely rely on the PRR in making your investment decision in the relevant Fund.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

More on this Tag

Table of Contents