CPF TBill Investing Explained

Investing in CPF TBill is a smart move for Singaporeans looking to grow their retirement savings.

CPF TBill is a type of investment offered by the Central Provident Fund (CPF), Singapore's social security savings program.

The investment is designed to provide a regular income stream to CPF members, with the option to invest in a series of fixed-rate bonds.

CPF TBill investments are available in various tenures, ranging from 3 to 10 years, allowing investors to choose a term that suits their needs.

T-Bills, or Treasury Bills, are short-term debt securities issued by the government to raise funds for various purposes.

They are typically sold at a discount to their face value, which means you pay less than the full amount and receive the face value back at maturity.

T-Bills have a fixed return, which is the difference between the face value and the purchase price.

The return is usually expressed as a percentage of the face value, and it's a fixed rate that's determined when the T-Bill is issued.

The return on T-Bills is generally lower than that of other investments, but they are considered to be very low-risk.

T-Bills are often used as a way to save money or as a short-term investment option.

The CPF, or Central Provident Fund, is a type of savings account that allows Singaporeans to save for their retirement and other long-term goals.

It's a mandatory savings program, which means that everyone who works in Singapore has to contribute a portion of their salary to the CPF.

The CPF has a separate account for T-Bills, which allows account holders to invest their savings in these low-risk securities.

This can be a good option for those who want to earn a small return on their savings without taking on too much risk.

T-bills offer a measure of flexibility with two maturity periods: 6 months and 1 year. Singapore government-issued treasury bills allow investors to accumulate interest by subtracting the initial bond price from the final bond value once it reaches maturity.

A different take: Tbill vs Bond

Since the end of March 2023, all three Singapore banks have allowed customers to use their CPF savings to apply for T-bills online. This is a significant improvement over the previous system, where customers had to queue at the banks for hours.

The CPF Ordinary Account (OA) is paying a base interest rate of 2.5% per annum. This is relatively low compared to the average yield of T-bills in Singapore, which is paying upwards of 3.5% today.

T-bills can be a good option for Singaporeans who want to compound their additional CPF interest with their T-bill yields. However, there is no predicting inflation data in Singapore over the next 5 years, or the next decade.

Investing in T-bills comes with some limitations, including the fact that they mature within 6 months to 1 year. This means that investors will be left wondering if there are still high yielding safe opportunities once they expire.

The good news is that long term rates have gone up, giving rise to the opportunity to invest in long term bonds that yield more than the CPF OA interest rate of 2.5%. However, these long term bonds will mature in 10 to even 50 years, so investors should make sure they don't need access to the CPF funds.

On a similar theme: Tbills Singapore

The CPF OA pays a base interest rate of 2.5% per annum, while the Special, Medisave and Retirement accounts pay upwards of 4% per annum.

The average yield of T-bills in Singapore is paying upwards of 3.5% today, allowing Singaporeans to compound their additional CPF interest with their T-bill yields.

This means that investors can potentially earn higher returns by investing in T-bills, especially when compared to the CPF OA's interest rate.

Check this out: 5 Year Treasury Rate Today Usd

T-bill returns have fluctuated in the past, but they generally trend upwards over time. In December 2023, T-bill returns reached a high of 4.14%, before steadily dropping to 2.99% on the issue auctioned on January 16, 2025.

You can calculate your T-bill returns in 2025 here. The trend of averaging higher returns per annum is a promising sign for investors.

However, inflation could be an issue in the future, which may affect the stability of T-bill returns. It's essential to monitor the interest rates going forward.

A continuous passive stream of income using T-bill returns and CPF interest can be a shrewd form of action for any Singaporean. This is because T-bill projected returns per annum are generally higher than the interest rates offered by one's CPF OA.

Here are some key points to consider when evaluating T-bill returns:

The Singapore Yield Curve has been shifting, and longer term rates are now higher. This means you can lock in a higher rate for a longer period of time.

The 10 year rate has gone up to 3.29% as of 13 Sep 2023. This is a significant increase that can impact your investment decisions.

By locking in a 10 year SGS bond at 3.29%, you would beat the CPF OA rate by 0.79% for the next 10 years. This is a substantial difference that can make a big impact on your savings.

Assuming you hold to maturity, you would outperform the CPF OA's return. This is because the higher interest rate on the SGS bond would earn you more interest over time.

Recommended read: 1 Year Tbill Rate

CPF investments offer a fixed return, with interest rates ranging from 0.5% to 10.5% per annum.

One key difference between CPF and T-bills is the interest rate, with CPF offering a fixed rate and T-bills offering a floating rate.

T-bills are short-term investments with maturities ranging from 91 days to 364 days.

CPF investments can be used to fund retirement, with a minimum sum required to be set aside for retirement, known as the Full Retirement Sum.

The interest earned on CPF investments is tax-free, making it a tax-efficient option for investors.

Investors can withdraw their CPF savings at 55, but are required to set aside a portion for retirement.

For more insights, see: Tax Rate of Tbills

When considering investment decisions, it's essential to understand the role of CPF in the investment process. CPF stands for Central Provident Fund, a mandatory savings plan in Singapore.

Investing in CPF is a long-term strategy, with a minimum lock-in period of 5 years for some investment options. This means you'll need to be patient and not expect to withdraw your money anytime soon.

Investing in CPF's T-Bill option, also known as the CPF Investment Scheme (CPFIS), offers a low-risk investment with returns linked to the Singapore Government Securities (SGS) yields.

Investing in CPF OA can be a great way to earn returns, but it's essential to consider your options carefully.

If you're looking for higher yields, you might want to consider investing in long-term government bonds, which have seen an increase in rates recently.

However, keep in mind that these bonds mature in 10 to 50 years, so you should ensure you don't need access to your CPF funds during that time.

One option to consider is investing in T-bills, which have yields higher than the CPF OA interest rate of 2.5%.

The auction schedule for T-bills is publicly available, showing the date, T-bill number, and cut-off yield.

Here's a snapshot of the recent auction schedule:

It's essential to keep in mind that investing in T-bills can result in losing out on 2 months of guaranteed interest while withdrawals or contributions are being made to your account.

Investors should monitor the yield trend ahead, as the yields of Singapore T-bills track those of US Treasuries, which are steadily rising as the US Federal Reserve tightens its monetary policy.

To open an investment account, you'll need to choose from CPFIS-approved banks: DBS/POSB, OCBC, or UOB. They offer a range of investment options, but first, you need to open an account with one of them.

DBS/POSB, OCBC, and UOB are some of the banks that offer CPF Investment Accounts. This account is specifically designed for investing in CPF-approved investments.

To get started, head to one of these banks and open a CPF Investment Account. This is a crucial step before you can invest in T-bills or other approved investments.

T-bills mature after six months or one year, allowing you to collect your money and transfer the proceeds back to your CPF OA as soon as possible.

You can do this online, making it a pretty easy process.

If you leave the money hanging, no interest will be paid on that money, so it's essential to be quick.

Remember to monitor your investments by checking your statements and the CPFIS dashboard once in a while to see what's happening with your T-bill holdings.

The average yield of T-bills in Singapore is paying upwards of 3.5% today, allowing you to compound your additional CPF interest with your T-bill yields.

Worth a look: Dbs Bank Cpf Investment Account