incidentally did this on 8/9. moved $200k from OA to TB BS22118H. when the auction came up, pleasantly surprised that it was 3.32% 😁. additional interest from SG is shiok like squeezing blood from stone 😂
Hi, need to visit the main branch to do this? I am concern i go to the main branch and they give me blank look.😁😅 Any other charges for using OA and SA for Tbills?
@@ryanl8922 I visited a "non main" dbs branch and it was able to be done. But I must say, the counter staff was unfamiliar with it and even the manager was not 100% familiar with it. I had to make a return trip the following day to countersign on an error they made in the form. charges - I didn't even notice it - probably as negligible as a packet of rice
The charges is actually more like half a packet of rice - $2.68 per transaction ($2.5+GST). 😁 I faced the same problem too at a OCBC branch office. They were not sure and even asked me to apply online. Only after I insisted that T bill application using CPF can only apply in person at any branch office then they went to make some phone calls before processing my application. 😂
@@dennisong5903 which branch in ocbc you went to? Maybe i can go to the same branch and hopefully i met the same officer that attended to you before 😁😅
Also one thing to consider is that the coupons paid by the bond will go into the CPFIS Account and lose compounding interest. So I guess to circumvent this, can just transfer from CPFIS to OA (Regardless, 3.2% simple interest on $1000 over 10 years is $320. 2.5% compounded annually on $1000 over 10 years is $280.08). Perhaps the “risk” of buying SGS bond e.g 10Y, is if rates continue rising, CPF MAY also increase their OA, thus, may then want to sell in secondary market. Since IF rates rise, price of bond may drop due to the inverse relation in secondary market. Thus the consideration then may be just to hold till maturity. In this case, perhaps T-bills may be better for a shorter term commitment (e.g. 6 mths). T-bills do not issue coupon but they are sold at a discount instead. Just my 2 cents!
can use how much of Ordinary Account ? non-compounded, right ? also the 1st $20K of OA get extra 1% interest, right ?................if so then like not worth the trouble lah...........
if I apply the upcoming T-bill BS23102H on 31/Jan before noon (Auction Date: 02 Feb 2023),using cpf-oa, when will my cpf be deducted? will I lost cpf interest of Jan?
For retirees there is another method to get more than 2.5%… This is via voluntary contribution up to $37,740. Because of the split into MA, SA and OA, the effective return is 3 over percent depending on the age which affect the split. The only down side is that if you need to money and withdraw from CPF, the first money comes from your 4% RA/SA first.
Thanks for the video. Benefitted from it. But I dont really understand the part where you mentioned tbills for 1 year is better than 6months due to the paplication fee? If you invest in either lock in period, your amount you get back wouldnt increase, so shldnt the 6 month duration be better?
@@DrWealthVideos The cut off yield hasn't been higher for 1 year vs 6 months, isn't it? So at the end of the day, you sticking your money in longer but getting the same discount on your principal?
@@DrWealthVideos Hi Dr Wealth, does the "everything goes back to CPF" apply to someone who is past 55? Of course I can also withdraw my OA savings to purchase the T bills but I would prefer everything to go back to my CPF OA in case the CPF interest rate goes up.
I am keen in putting my CPF for only plus/minus 1 year. definitely looking at more than $3k. You mentioned 4:04, SGS Bonds will costs $2.50 plus $2 per quarter on each counter. I was wondering, if I get the T-bill instead of SGS Bonds, will i still get charge the same rate per counter too? Can I check for your CPF IS costs....where you get your source so i can go read it myself without needing to keep asking too? Thanks.
@@DrWealthVideos Tbills. I applied using cash for the previous issue there wasn't any fees deducted. Using Cpf oa and sa for tbills. I cant find any fees stated. Do you know where i can read up on this? Yes i read the $2 quarterly fees, any other fees?
Can I ask if the coupon payments will also go back to OA every 6 for SGS and upfront for Tbills ? Also , if we already have a CPFIS account, we still need to apply at branch cos nowadays it’s fully packed with FD Depositors 😅
"CPF interest is computed monthly. It is credited to your respective accounts by 1 January of the following year and compounded annually. CPF balances used for interest computation are affected by the transactions in your account. For instance, contributions (including refunds) received this month start earning interest next month. Withdrawals/deductions in this month will not earn interest from this month onwards." There may be loss of 1 month interest of 2.5% due to the way CPF interest is computed. The actual gain may not be from 2.5% to 3.2% if you are buying a 6month T-bill. Correct me if I am wrong.
Agree the title of the video is misleading. I hv the same understanding too. To "break even" by using CPF OA funds, the 6M Tbill has to yield at least 2.9% (7/6 x 2.5%) as there is at least 1 month of interest lost. There is up to 2 months of interest lost, depending on when the OA funds get deducted and deposited as those 2 months won't earn any CPF OA interest. So the actual gain is only at most 0.3% (2.9% to 3.2%) or actually less since there are admin fees to be paid to the bank. Not sure if bcos the presenter is not clear himself. To buy Tbills and SGS, the investor can participate in an auction, where the cut off yield (different from coupon) is not determined upfront. So there is no guarantee that the investor can get 3.2% again by putting into Tbills. The "how" isn't explained well, as the presenter din touch on competitive and non-competitive bidding, how these auctions work, what the cut-off yield means and how it is different from coupon etc. Understand that the presenter is probably not sponsored so applaud the effort but the content cld be done better.
That would also meant that they have to increase the hdb loan rate of 2.6% now. That would hurt a lot of hdb loan owners. Yes what happen when inflation was low?(good point)
Hi Alvin, using oa to buy T-bill, need in person visit main bank instead online. The waiting times can be 4 hours. Can you share T-bill monthly issue and closing date so that can plan ahead to visit main bank? Thanks 😊
for someone turning 55 mid next year, can he or she buys 1 tranche of 1 yr T-bill using CPFSA and 1 tranche using CPFOA to shield SA from going into RA? 1 less risky option to consider but compromising the opportunity cost of 4% interest rate from SA for 1 year.
But the cpf oa is base on your total OA amt to determine the interest earn. Will u be earning lesser for example u have 60k OA and u decide to invest 20k into sgs or t bill. Sorry my maths abit weak
Thank You Dr Wealth for pointing out SGS bonds can save us from OA.
incidentally did this on 8/9. moved $200k from OA to TB BS22118H. when the auction came up, pleasantly surprised that it was 3.32% 😁. additional interest from SG is shiok like squeezing blood from stone 😂
Hi, need to visit the main branch to do this?
I am concern i go to the main branch and they give me blank look.😁😅
Any other charges for using OA and SA for Tbills?
@@ryanl8922 I visited a "non main" dbs branch and it was able to be done.
But I must say, the counter staff was unfamiliar with it and even the manager was not 100% familiar with it. I had to make a return trip the following day to countersign on an error they made in the form.
charges - I didn't even notice it - probably as negligible as a packet of rice
Thanks, i expect they will not be familiar. 😁😅
The charges is actually more like half a packet of rice - $2.68 per transaction ($2.5+GST). 😁
I faced the same problem too at a OCBC branch office. They were not sure and even asked me to apply online. Only after I insisted that T bill application using CPF can only apply in person at any branch office then they went to make some phone calls before processing my application. 😂
@@dennisong5903 which branch in ocbc you went to?
Maybe i can go to the same branch and hopefully i met the same officer that attended to you before 😁😅
Also one thing to consider is that the coupons paid by the bond will go into the CPFIS Account and lose compounding interest. So I guess to circumvent this, can just transfer from CPFIS to OA (Regardless, 3.2% simple interest on $1000 over 10 years is $320. 2.5% compounded annually on $1000 over 10 years is $280.08).
Perhaps the “risk” of buying SGS bond e.g 10Y, is if rates continue rising, CPF MAY also increase their OA, thus, may then want to sell in secondary market. Since IF rates rise, price of bond may drop due to the inverse relation in secondary market. Thus the consideration then may be just to hold till maturity. In this case, perhaps T-bills may be better for a shorter term commitment (e.g. 6 mths). T-bills do not issue coupon but they are sold at a discount instead. Just my 2 cents!
Thanks, very useful idea. Since the video was made, I guess the yield curve is no longer flat. 2Y at 3.15 but longer tenors at well below 3 percent.
can use how much of Ordinary Account ?
non-compounded, right ?
also the 1st $20K of OA get extra 1% interest, right ?................if so then like not worth the trouble lah...........
if I apply the upcoming T-bill BS23102H on 31/Jan before noon (Auction Date: 02 Feb 2023),using cpf-oa, when will my cpf be deducted? will I lost cpf interest of Jan?
For retirees there is another method to get more than 2.5%… This is via voluntary contribution up to $37,740. Because of the split into MA, SA and OA, the effective return is 3 over percent depending on the age which affect the split. The only down side is that if you need to money and withdraw from CPF, the first money comes from your 4% RA/SA first.
Thanks for the video. Benefitted from it. But I dont really understand the part where you mentioned tbills for 1 year is better than 6months due to the paplication fee? If you invest in either lock in period, your amount you get back wouldnt increase, so shldnt the 6 month duration be better?
Because if you keep rolling over every 6 mths your cost will increase. If u just want to do it once then no difference.
@@DrWealthVideos The cut off yield hasn't been higher for 1 year vs 6 months, isn't it? So at the end of the day, you sticking your money in longer but getting the same discount on your principal?
Hey Dr Wealth great idea ..keep it up
Very good...i was looking to invest oa into sgs, t bills until i saw your video
SSB interest is paid bi annually while CPF is only annually. Thus is the compounding
What about the fee incurred from cash transaction? DBS shows $2 waived, I assume that's the transaction fee. Is there any holding fee afterwards?
Custodian fee. $2 per quarter
Hi, what happen to the SGS fund if one pass on ? Will it be force sell in open market? TIA.
It won’t be forced sold. They will be treated as estate. Which would be distributed according to your will or the intestate succession act.
Hi Alvin,when announcement date go to the bank or before ,as you said apply using OA have to personally go to local bank !
After announcement and before auction date
Bank closing date is about 2 days earlier than auction date. Check with your bank to be safe.
Hi Dr Wealth,
May i ask, using oa to buy sgs bond the half yearly couple money goback to your cpf account right?
Everything goes back to cpf
@@DrWealthVideos Hi Dr Wealth, does the "everything goes back to CPF" apply to someone who is past 55?
Of course I can also withdraw my OA savings to purchase the T bills but I would prefer everything to go back to my CPF OA in case the CPF interest rate goes up.
I am keen in putting my CPF for only plus/minus 1 year. definitely looking at more than $3k.
You mentioned 4:04, SGS Bonds will costs $2.50 plus $2 per quarter on each counter. I was wondering, if I get the T-bill instead of SGS Bonds, will i still get charge the same rate per counter too?
Can I check for your CPF IS costs....where you get your source so i can go read it myself without needing to keep asking too?
Thanks.
Here www.cpf.gov.sg/content/dam/web/member/faq/documents/INV_AnnexD.pdf
Hi Alvin, how about T-Bills? Can we use our CPFOA to buy it?
Yes. Covered in the video
Hi Dr, i dont understand the part on 6mth Tbills transaction cost of $250. Why is there a transaction cost? Can explain that a bit more for me. Thanks
The agent bank needs to be paid to handle the transaction for u. Cos you have to go thru the bank to apply the bonds.
@@DrWealthVideos Tbills. I applied using cash for the previous issue there wasn't any fees deducted.
Using Cpf oa and sa for tbills. I cant find any fees stated. Do you know where i can read up on this?
Yes i read the $2 quarterly fees, any other fees?
will there be any cpf accrued interest incurred for using cpf OA for investment?
Not for investments.
Can I ask if the coupon payments will also go back to OA every 6 for SGS and upfront for Tbills ? Also , if we already have a CPFIS account, we still need to apply at branch cos nowadays it’s fully packed with FD Depositors 😅
Yes. Everything back to cpf
"CPF interest is computed monthly. It is credited to your respective accounts by 1 January of the following year and compounded annually.
CPF balances used for interest computation are affected by the transactions in your account. For instance, contributions (including refunds) received this month start earning interest next month. Withdrawals/deductions in this month will not earn interest from this month onwards."
There may be loss of 1 month interest of 2.5% due to the way CPF interest is computed. The actual gain may not be from 2.5% to 3.2% if you are buying a 6month T-bill. Correct me if I am wrong.
I had same question too! There could be 2 months of interest lost as when funds get deposited into CPF, interest would be paid next month.
@@vinnarang yes, i did some further reading, and there could be 2 months interest lost. The video should have highlighted this issue.
Agree the title of the video is misleading. I hv the same understanding too. To "break even" by using CPF OA funds, the 6M Tbill has to yield at least 2.9% (7/6 x 2.5%) as there is at least 1 month of interest lost. There is up to 2 months of interest lost, depending on when the OA funds get deducted and deposited as those 2 months won't earn any CPF OA interest. So the actual gain is only at most 0.3% (2.9% to 3.2%) or actually less since there are admin fees to be paid to the bank. Not sure if bcos the presenter is not clear himself.
To buy Tbills and SGS, the investor can participate in an auction, where the cut off yield (different from coupon) is not determined upfront. So there is no guarantee that the investor can get 3.2% again by putting into Tbills. The "how" isn't explained well, as the presenter din touch on competitive and non-competitive bidding, how these auctions work, what the cut-off yield means and how it is different from coupon etc. Understand that the presenter is probably not sponsored so applaud the effort but the content cld be done better.
@@wpk2299 for 2 months of interest lost, the breakeven will be 2.5% x 8/6 = 3.33%.
Therefore, for interest rate of 3.2%, it will be worse off.
CPF interest rates must rise at some point in time to stay relevant and fulfil its intended purposed in today's high-inflation world!
Should they lower the rates when inflation was Low?
That would also meant that they have to increase the hdb loan rate of 2.6% now. That would hurt a lot of hdb loan owners.
Yes what happen when inflation was low?(good point)
Better to keep in oa if more than 20 years
Hi Alvin, using oa to buy T-bill, need in person visit main bank instead online. The waiting times can be 4 hours. Can you share T-bill monthly issue and closing date so that can plan ahead to visit main bank? Thanks 😊
Check here www.mas.gov.sg/bonds-and-bills/auctions-and-issuance-calendar
Just get the form from RM and fill it up. No need to queue.
I rang RM, CPFIS application form ONLY get it from Main brach.
@@siewgektay3581 you need a new RM 🤭
for someone turning 55 mid next year, can he or she buys 1 tranche of 1 yr T-bill using CPFSA and 1 tranche using CPFOA to shield SA from going into RA? 1 less risky option to consider but compromising the opportunity cost of 4% interest rate from SA for 1 year.
Did he ever mention CPFSA
But the cpf oa is base on your total OA amt to determine the interest earn. Will u be earning lesser for example u have 60k OA and u decide to invest 20k into sgs or t bill. Sorry my maths abit weak
Assuming out of 60k in cpf oa u invest $20k in bonds… 20k earns bond interest and remaining 40k still earns cpf interest
What are the fees for t bills? Same as sgs bonds ?
Same
Thank you