Thursday 29 September 2022

(Sour Grapes Post) Why i do envy people who buy T-bills and Savings Bond

As per title, this is a post that is meant to be offensive and sarcastic to various extents

I do envy whenever i see people saying they have subscribed into the Singapore Savings Bond or the T-bills.

They have effectively secured guaranteed returns of around 3% (3.32% for the latest t-bill)

(1.66% Returns Secured)

I think they can pat themselves on the back and say they are the privileged ones.

The privileged group include the following

  • Smart People who decided to beat the Investment / Job / Forex / Custom officer scams by getting guaranteed returns.
  • Educated People who figured out that fixed deposit is a long queue and you can do everything online conveniently
  • Highly Skilled Folks who do not need the money to be doing any risky investments to generate any higher returns or the capital to inject their business.
  • Old people that cannot risk waiting five year ten years for markets to recover(for why this is so, please check with LBS from Investingnote)
  • Folks who figured out that the money conditions will be still bad 6 months / 12 months later
  • Folks who cannot be bothered with the market nor with any form of compounding at above 3% per annum for the next 10 years
  • Folks who also figured out that Sing Dollar would be a very strong asset class for at least 6-12 months.
  • Rich Folks who can focus on capital conservation.
Unfortunately I do not really fit in any of the groups above which is why i would consider such products to be last on the buying list or not even on the list at all actually.

Every day you see the stock market going down and you start laughing for no reason since you are going to make that guaranteed gains anyway.

(It makes me jelly at how some people can just compound wealth at 2.64% across 5 years)

To make things more funny, sometimes we might hear things like 'Wait for the next month SSB or next month T-bill cause rates will be higher.'

Isn't that same as saying waiting for crash to occur or it will go lower because more risk are ahead?

I mean a t-bill of 6 months / 12 months ....what's the point of waiting an extra month when the opportunity cost of that month is getting higher? 

To quote an example,

6 Months T-bill Month

Cut off Rate (Per Annum)

Implied 6 Months Rate

Worth Waiting Additional Month?

March 2022




April 2022




May 2022




June 2022




July 2022




Aug 2022




Sept 2022




In terms of asset allocation perspective, to lock in a % of your money in something that generates 3% a year sounds pretty good. That is until you see that the core inflation is 5.1% year on year in August.

To make things more realistic, the food index is 105.2 in January 2022 but it is 107.5 in August.
If a basic necessity like food has rose by around 2%, then this risk free rate does not sound so attractive in real terms.

Of course there is also no leverage of sorts, e.g borrowing money to buy SSB or T-bill etc.

Which is why i envy anyone who can afford to make their asset allocation into cash even if we know that the stock market is bad, the economy is filled with uncertainty from inflation and a recession etc.

As someone who is reaching the end of my 20s, i do feel that my life is kinda f-ed up from problems happening from both inside and outside (which might apply for some similar age folks).

Inside will be mainly because of my inability to perform in the equity markets when i have shown glimpses of my performance in the past and being unable to replicate them in the recent times. I have an expectation of what i should be able to achieve by i am very far from it.

Outside will be the current environment (Too many various investments that might tempt a normal person e.g Crypto, Tech Stocks, NFT to Staking etc, cost of living likely to increase quicker than salary, having to pay off loans or incur loans related to houses/ studies etc, not really a conducive environment for investors)

End of the day, its a choice everyone makes after considering their own situation, there is no right or wrong choice, for what we know SGD might come out as strongest currency in the next 12 months or interest rates might face a sudden dip and those who locked in 10 years Savings Bond become the major winners. Also, markets might crash even more and result in T-bill and Savings Bond users benefitting.

But being able to put money into such instruments is still worth a lot of envy to my own personal view.

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