In recent years, Treasury Bills—more commonly known as T-Bills—have become increasingly popular in Singapore, especially among investors seeking a low-risk, short-term alternative to traditional savings or fixed deposits. As the economic climate continues to evolve, many individuals are looking for ways to preserve capital, maintain liquidity, and still earn a respectable yield. In this comprehensive guide, we will explore everything you need to know about T-Bills in Singapore—from what they are and how they work to the pros, cons, and practical considerations for beginners.
What Are T-Bills?
Treasury Bills (T-Bills) are short-term debt securities issued by the Singapore Government under the Monetary Authority of Singapore (MAS). They are essentially a way for the government to borrow money for short periods—typically 6 or 12 months—by offering investors a return in the form of discounted prices rather than interest payments.
When you purchase a T-Bill, you are lending money to the government, and in return, you will be repaid the full face value upon maturity. The difference between the purchase price and the face value represents your earnings.
For example:
- You purchase a 6-month T-Bill with a face value of S$1,000 at S$970.
- Upon maturity, the government pays you S$1,000.
- Your return is S$30, or approximately 3.09% annualised.
Why Are T-Bills Gaining Popularity?
In a high-interest-rate environment, T-Bills have become a particularly attractive option for investors who:
- Prefer safety and capital preservation.
- Seek better returns than traditional bank savings.
- Want flexibility due to the short maturity period.
- Need a safe haven during market volatility.
The fact that T-Bills are backed by the Singapore Government—a AAA-rated sovereign entity—means they are considered virtually risk-free, making them a reliable component of a conservative investment strategy.
Key Features of T-Bills in Singapore
| Feature | Description |
|---|---|
| Issuer | Singapore Government (via MAS) |
| Tenor | 6 months or 1 year |
| Minimum Investment | S$1,000 (in multiples of S$1,000) |
| Returns | Discounted price (no coupon interest) |
| Credit Risk | Extremely low |
| Liquidity | Tradable on the secondary market |
| Tax Treatment | Returns are tax-free for individuals |
| Application Frequency | Weekly auctions (typically every Thursday) |
How to Invest in T-Bills
There are two primary ways to purchase T-Bills in Singapore: through competitive or non-competitive bidding during the MAS auction process.
1. Non-Competitive Bids
Ideal for beginners, non-competitive bids mean you agree to accept the cut-off yield decided at the auction. You are guaranteed to receive the full allocation (up to a maximum), but you won’t know the exact yield in advance.
2. Competitive Bids
With a competitive bid, you specify the minimum yield you are willing to accept. However, there is no guarantee your bid will be accepted if the cut-off yield is lower than your offer.
Application Process
You can apply for T-Bills via:
- Internet banking of participating banks (e.g., DBS/POSB, OCBC, UOB).
- CPF Investment Scheme (CPFIS) for those eligible.
- SRS Accounts (Supplementary Retirement Scheme).
Applications must be submitted before the auction deadline—usually one or two working days before the auction date.
Understanding Yields
The cut-off yield is the highest accepted yield at which the government successfully sells all the T-Bills on offer. It is expressed on an annualised basis, even though the T-Bill tenure may be shorter.
Let’s break it down:
- If you bought a 6-month T-Bill at a 3.5% annual yield, your actual return would be about 1.75% over 6 months.
- This yield reflects market conditions, demand, and overall interest rate levels.
MAS publishes auction results after each issue, including bid coverage ratios and cut-off yields, which help investors gauge market interest and pricing trends.
Comparing T-Bills to Fixed Deposits
| Feature | T-Bills | Fixed Deposits |
|---|---|---|
| Issuer | Government | Commercial banks |
| Tenure | 6 or 12 months | Varies (1 month to 5 years) |
| Return Type | Discount to face value | Interest-bearing |
| Risk | Very low | Low |
| Liquidity | Tradable on market (though not highly liquid) | Early withdrawal may incur penalties |
| Return Consistency | Varies with market yield | Fixed |
| Taxation | Tax-free for individuals | Taxable depending on source |
For investors seeking absolute safety with potentially higher short-term returns, T-Bills often outperform short-term fixed deposits, especially when interest rates are rising.
CPF and SRS: Can You Use Them for T-Bills?
Yes, you can use both your CPF Investment Account (only Ordinary Account funds) and SRS Account to invest in T-Bills.
CPFIS:
- Only available through DBS, OCBC, and UOB.
- Must have a CPF Investment Account.
- Returns from T-Bills will not be counted as CPF interest.
SRS:
- More flexible and accessible.
- Application is similar to cash investments, done through your SRS provider.
These methods allow you to optimise otherwise idle CPF or SRS funds without taking on equity market risk.
Risks and Considerations
While T-Bills are considered very low-risk, they are not entirely without considerations:
1. Opportunity Cost
Locking up funds in T-Bills for 6 or 12 months may prevent you from capitalising on other investment opportunities, especially if interest rates rise sharply during that period.
2. Liquidity
Although tradable, T-Bills are not very liquid on the secondary market. You may face difficulty selling them at a desirable price before maturity.
3. Yield Fluctuations
Future yields may vary with market interest rates. A high yield today doesn’t guarantee similar rates in the next issuance.
4. No Compounding
Since T-Bills don’t pay interest over time, there’s no opportunity for reinvestment or compounding during the holding period.
Who Should Consider T-Bills?
T-Bills are suitable for:
- Risk-averse investors seeking capital preservation.
- Retirees or near-retirees looking to park idle cash safely.
- Savers who want better returns than savings accounts.
- Younger investors with short-term financial goals.
- CPF or SRS account holders looking to maximise dormant funds.
They are especially appropriate during uncertain market periods, or when investors are adopting a “wait-and-see” approach before committing to longer-term assets.
Real-World Example: A Case in 2025
As of mid-2025, average cut-off yields for 6-month T-Bills have been hovering around 3.6% to 3.9%, significantly higher than many traditional savings or fixed deposit products. Amid economic uncertainty and a cautious global outlook, more Singaporeans—especially retail investors—are turning to T-Bills to weather volatility while still earning meaningful returns on their cash.
Many now use T-Bills in cash management ladders, staggering maturity dates to keep funds accessible while locking in yields across different periods.
Conclusion: Are T-Bills Worth It?
For the beginner investor or the conservative saver in Singapore, T-Bills present a uniquely secure and practical opportunity. They offer a blend of safety, flexibility, and yield that few other financial instruments can match in today’s volatile environment.
However, T-Bills should be part of a larger portfolio strategy. While ideal for short-term parking of funds, they lack growth potential over the long term. As such, they work best when balanced with investments in equities, bonds, or unit trusts for a more holistic financial plan.
Whether you’re just starting your investment journey or looking to diversify your approach, understanding how T-Bills work—and how they fit into your broader financial goals—is a smart and timely move.