good and bad
Financial advisers told CNA that T-bills and short-dated SGS bonds, with their comparatively high yields, are worth considering for investors looking to generate returns in volatile market conditions.
Fully backed by the government, they are also widely considered safe investments.
Investors are also likely to get the amount they requested, unlike Singapore savings bonds, which have experienced smaller allocation sizes due to fervent demand, said Eliza Lee, associate financial services manager at Philips Capital.
Singapore Savings Bonds have a limit of S$200,000 per investor in individual tranches, but for the August issue the volume limit – if the issuance size of the application was exceeded – was S$9,000.
Investors can invest up to S$1 million for each T-Bill application and up to S$2 million for each SGS bond application. Individual investors typically get what they request, Mr. Lee said.
Additionally, there is no penalty for liquidating T-Bills or SGS bonds before maturity, Mr Tan said, although he warned it could result in capital losses through sale in the secondary market. Is.
T-Bills and SGS Bonds are negotiable debt securities, meaning they can be bought or sold on the Singapore Stock Exchange, but their prices are very sensitive to interest rate fluctuations. In general, bond prices and interest rates move in opposite directions, ie if interest rates rise, bond prices will fall and vice versa.
In addition to market risk, liquidity can be an issue when there are few willing buyers.
“The bond market isn’t like the stock market… so it can be very difficult to find buyers,” said Mr. Lee. “You may have to offer a hefty fire sale price … but you’re unlikely to be willing to lose that much, so you’ll probably stick with it.”
He continued, “Six months (for a T-bill) may seem like a short time, but when you’re stuck in a sticky situation, it can feel like an eternity.”
And at maturity, said Mr. Lee, who specializes in fixed income strategies, investors need to start looking at investment options and facing the potential interest rate risk.
Using the example of a six-month T-bill, he said: “The tariffs were very attractive, but what happens after six months?
“You have to deal with the fact that with every renewal you’re hoping the rates are still good.”