Dear readers, the latest six-month Singapore Treasury Bill (T-bill), coded BS25113W, has just concluded with a cut-off yield of 1.85% per annum. This rate has stirred discussions among savers and retail investors, particularly those who have been accustomed to the higher-yielding environment seen over the past two years.
While 1.85% may still be considered respectable for a short-term, government-backed instrument, it is evident that the “golden period” of fixed-income products in Singapore has come to a close. Savers now face a difficult investment landscape shaped by declining interest rates, persistent inflation, and rising living costs.
Let us take a deeper dive into what this T-bill result means for the everyday Singaporean, why the current financial environment feels less rewarding than before, and what alternative options are still available to preserve capital and generate passive income.
1. What Are Singapore Treasury Bills (T-Bills)?
T-bills are short-term debt instruments issued by the Monetary Authority of Singapore (MAS) on behalf of the Singapore Government. They are typically offered in tenors of 6 months or 1 year and are considered virtually risk-free as they are backed by the Singapore government’s triple-A credit rating.
T-bills do not pay interest in the traditional sense. Instead, they are issued at a discount and mature at par value. For example, if you purchase a 6-month T-bill at 98.15, it will mature at 100, resulting in a yield of 1.85%.
Because of their low-risk nature, T-bills are often favoured by retirees, conservative savers, and those looking to park funds temporarily with minimal downside risk.
2. 1.85%: Still a Decent Return, But A Far Cry from 2022-2023
At 1.85% per annum, the latest BS25113W issue is below the psychological threshold of 2% that many savers now use as their benchmark. This figure may appear uninspiring, especially when compared with T-bills issued between 2022 and 2023 when cut-off yields often ranged between 3.5% to even 4.2% during the peak of the U.S. Federal Reserve’s rate hikes.
During that time, the global tightening of monetary policy to combat inflation translated into higher yields for government securities worldwide — including Singapore. T-bills and Singapore Savings Bonds (SSBs) became incredibly popular, with retail applications oversubscribed many times over.
In contrast, today’s lower yield reflects a very different monetary environment. Central banks, including the Fed and MAS, are now pivoting towards rate stability or even cuts, as inflation appears more under control globally.
3. Why T-bills Are No Longer “In Vogue”
The fall in interest rates is a natural part of the economic cycle. Yet, to many local savers, this transition has come with frustration. The days of earning 3.5% risk-free with a simple application on your bank’s app or CDP account are now firmly behind us.
Several reasons explain why T-bills and SSBs are no longer the go-to parking spot for idle funds:
- Falling global interest rates: With inflation data softening and economies slowing down, central banks are signalling rate cuts. Lower global yields impact Singapore’s yield environment.
- Better-performing risk assets: With global stock markets, especially in the U.S. and parts of Asia, rallying strongly in 2024–2025, many investors are diverting funds into equities and ETFs to chase higher returns.
- Opportunity cost: A 1.85% return does not outpace inflation in Singapore, which remains above 3% in several core categories like food, services, and transport.
- More complex landscape: With yields declining, investors need to be savvier, researching alternatives such as REITs, corporate bonds, or short-duration unit trusts that can still offer 3–4% yields with moderate risk.
4. How Money Market Funds Compare Now
Even traditionally conservative money market funds (MMFs) have not been spared from the yield contraction. One prominent example is PhillipCapital’s Smart Park, which now offers a return of 1.85% per annum — exactly matching the cut-off yield of the recent 6-month T-bill.
Just six to nine months ago, some MMFs were giving upwards of 3%. With declining interbank rates (SORA, SIBOR), these MMFs — which invest in high-grade short-term debt like government bills and bank deposits — are also suffering from the same yield pressure.
Yet, MMFs still offer key benefits:
- Daily liquidity with no lock-in
- No capital risk (for reputable funds)
- Ease of access via brokers or platforms
Still, for returns around 1.85%, the value proposition of MMFs starts to weaken, especially compared to savings accounts or high-interest promotional accounts offered by banks.
5. Rising Cost of Living: A Harsh Reality Check
Even as interest rates fall, Singaporeans are grappling with high daily expenses. From groceries to transport and medical costs, inflation remains very much a part of everyday life.
Headline inflation might have dropped from its 2022 highs, but core inflation — which excludes private transport and accommodation — remains sticky. Categories like fresh food, utilities, and healthcare have seen persistent price pressures.
This discrepancy is what makes the current yield environment feel even more painful: returns are falling, but costs aren’t. For savers, this creates a net erosion of purchasing power.
This is why many Singaporeans deeply appreciate government relief initiatives like the CDC vouchers and SG60 benefits.
6. CDC and SG60 Vouchers: Lifelines for Daily Living
The Community Development Council (CDC) vouchers have become an increasingly valuable form of support for households. These digital vouchers, distributed by the government, can be used at participating hawker stalls, wet markets, and supermarkets.
In 2025, each Singaporean household received $600 worth of CDC vouchers, split between hawker/market stalls and supermarkets. These vouchers go a long way, especially for families who cook often or rely on local food options.
Separately, the SG60 package, introduced in conjunction with Singapore’s 60th year of independence, has also provided extra financial cushioning — including one-off cash payouts, additional Medisave top-ups, and more support for low-income households.
One point I personally hope the authorities can consider is to lower the minimum redemption amount for supermarket vouchers from $10 to $5. This would make them more practical for smaller purchases. Often, my spend at the supermarket is less than $10, and I’m left unable to fully utilise the vouchers unless I top up in cash — which slightly defeats the purpose.
7. What Are Savers Doing Now? Shifting Strategies
With traditional “safe” instruments yielding less, savers and investors have to pivot:
- Short-term fixed deposits: While rates have also fallen, some banks are still offering 3–3.2% for 3 to 6-month placements. These can be a better option for idle cash than T-bills at 1.85%.
- Higher-yield REITs: Though not risk-free, REITs like CapitaLand Integrated Commercial Trust (CICT) or Mapletree Industrial Trust have stabilised and offer 5–6% yields with potential capital appreciation.
- Corporate bond unit trusts or ETFs: Products like the Nikko AM Investment Grade Corporate Bond ETF give exposure to quality debt and yield closer to 3.5–4%.
- Singapore Savings Bonds (SSBs): While recent issues are uninspiring (1.9% average), future ones might improve slightly. SSBs still offer flexibility and capital protection.
- U.S. treasury ETFs: Some Singaporeans are exploring USD-denominated ETFs like SGX-listed ABF U.S. Treasury Bond Index Fund to ride future Fed rate cuts.
These alternative instruments, while not risk-free, can potentially outpace inflation and deliver better net returns.
8. Is It Still Worth Applying for T-Bills?
The answer depends on your financial goals and time horizon.
- If you want to park funds safely for 6 months with no capital risk, a T-bill is still a great option — especially when compared with a low-yielding savings account (e.g., <0.1% interest).
- If you’re saving for a short-term goal (tuition fees, holiday, downpayment), locking in 1.85% is still better than letting funds lie idle.
- If your risk appetite allows for more volatility, the opportunity cost of being in a low-yield asset may be too high.
Ultimately, it comes down to balancing safety, liquidity, and return.
9. What Could Change This Landscape?
Looking ahead, a few things might cause rates to rise again:
- Unexpected inflation resurgence causing central banks to hold or hike rates again.
- Geopolitical tension or market volatility, making safe assets more attractive.
- Increased government borrowing needs, which can raise yields if demand drops.
Conversely, if the global economy slows meaningfully or central banks slash rates further, yields could fall even more — potentially dropping T-bill rates below 1.5%.
10. Conclusion: Tread Carefully, But Don’t Sit Idle
To conclude, while the current 6-month T-bill yield of 1.85% may appear underwhelming, it still represents a safe and stable return in a time of uncertainty. However, it is clear that the era of ultra-lucrative, low-risk yields is behind us — at least for now.
Savers and investors will need to be more proactive, flexible, and informed. Consider a diversified approach that balances capital preservation with modest risk exposure. At the same time, maximise the benefits of government support schemes like CDC vouchers, which provide tangible help in these inflationary times.
As the financial landscape continues to evolve, those who stay engaged and adaptable will be best positioned to not only preserve wealth — but grow it steadily.