We all know by now that it's not the best idea to leave our excess cash in a bank savings account. After all, with some savings accounts giving as low as 0.05 per cent per annum interest, the meagre returns are insufficient in helping us beat inflation in the long run.
Whatever the reason, if you're hoping to reap a higher return on your excess cash, T-bills might just be your answer. In this guide, we will dive into the ins and outs of T-bills so you can decide if they're a good addition to your portfolio.T-bills are short-term Singapore Government Securities issued at a discount from their face value, and they pay a fixed interest rate. Their maturity periods are as short as six months and a year, with six months being more common.
Second, is to foster the growth of an active secondary market for both cash transactions and derivatives to enable efficient risk management. So for instance, an investor who buys a six-month T-bill worth S$10,000 with a yield of three per cent p.a. need only pay S$9,850 upfront. At the end of the tenor, he will receive the full S$10,000 and therefore earn S$150.Singapore is one of just 11 countries in the world — including Finland and Switzerland — that have the AAA credit rating. And since T-bills are backed by the Singapore Government, they are considered a very low-risk investment .