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Sunday, March 23, 2008
Sunday, March 2, 2008
Saturday, March 1, 2008
Treasury bills: Your alternative to fixed deposits in Singapore
Today's wired society with internet access 24x7 sees everyone working at the speed of thought, as bits and bytes are transmitted virtually simultaneously through computer networks and systems.
How can we leverage on the available technology for our personal investments?
Let me share how we can buy and sell 3 month Singapore Government treasury bills issued by MAS using Poems. For those who have not heard of poems, it is Phillips Securities Online Electronic Mart system. Those who buy and sell stocks and shares in SGX online will know what is poems. The beauty of poems is that it is one of the more progressive electronic trading plaforms catering to retail investors and they have added the feature of being able to apply for the 3 month treasury bills issued every week by MAS.
Buying treasury bills using POEMS
The steps are simple:
1. Apply for a poems trading account - you can download the form online and sending it them them along with the required documents and deposit. You can also do it at any of their investor centres.
2. Apply for a cash management account online using the Online Forms option under > Stocks > Account Management
3. Once Phillips Securities has approved your (1) and (2) you are ready to participate in the 3 month treasury bills issuance market
Do note that poems does charge a bid-ask spread between what is offered by MAS on the cut-off yield vs the actual yield you receive. This is effectively the commission that Phillips earns from allowing you to do this electronically. Personally, I think this is worth the effort since it saves us time and effort and time IS money.
Take note that you should have sufficient funds when you are buying the treasury bills. Once purchased, you may sell the treasury bill anytime before maturity to Phillips of course at a slight discount. As treasury bills work as a zero coupon basis, this means if you deposit buy $1,000 worth of treasury bills, you will be deducted upfront for say, $990 and when the treasury bill matures, you will receive $1,000. Hence, your yield (or interest) is computed by this formula:
* Yield = 365 x (100-Price) / number of days.
Example. A 91 day treasury bill is priced 99.30. Hence yield = 365x(100-99.30)/91= 2.808%
Transferring money to and from poems is also quite easy. Once you have set up the poems account and also the EPS (electronic payment for shares) with Poems, you may:
1. Transfer money to Poems using internet banking or ATM via EPS feature
2. Transfer money from Poems using Online Forms to pay via direct credit (POSB/DBS) or via quick cheque to any local bank in Singapore
For those of us who wish to have more alternative lower risk investment instruments, treasury bills are a good complement to fixed deposits and savings and let your fingers help you do the investing!
Make your money work harder for you!
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