Investing In Treasury Bills - A Singapore Context

In the current low interest rate environment, a SGD saving account may only fetch as low as 0.125% while a 1 year SGD FD gives a rate of less than 1%.

One avenue to increase one's return on idle cash is to invest in T bill which has a materity of 3 months. As I discover, such T bills are issued every monday of the week and can be applied through Primary Dealer banks in lot of $1000. The yield on the latest issue on 3/10/05 was 2.23%. Interest earned from T bills/ SGS bonds is tax exempt. Apply for new issue of T bills does not involve any additional charges unless one bid for the those already in issue (charges built in the bid-offer spread).

Hmmm... how about investing in T Bills using money parked in SRS account ? The benefits would be two folds:

1. Tax savings by contributing to SRS account
2. Increase return on idle cash while waiting for cash to be deployed for share investment when opportunity arises.

Only concern about SRS account is the potential bank fee levied on transactions or monthly maintenance fee. There is published rates but the charges are waived for the moment. I think sometime in the future, it is likely for the bank to charge the SRS a/c holders due to the adminstrative work involved.


References:
http://www.sgs.gov.sg/staticindex.html - SGS website

http://www.wallstraits.com/community/viewthread.php?tid=1710&page=2 - Forum discussion

http://www.mof.gov.sg/taxation_individuals/srs/index.html - Information on SRS (MOF)

http://www.finatiq.com/helpcentre/Hcr_Basics_SRS.shtm - Illustration on SRS