Financial planners urge investors to consider other options as T-bills yields lose steam

[SINGAPORE] With the yields on Treasury bills (T-bills) and Singapore Savings Bonds (SSBs) easing, some investment advisers are reminding investors to consider higher-yielding products.

Many older Singaporeans are still entrusting most of their funds to T-bills and SSBs, a report from DBS last year showed.

The bank’s Life After Work report indicated that Singaporeans aged 35 to 44 invest about 17 per cent of their salaries, with around 60 per cent of those investments allocated to SSBs and T-bills.

Among those aged 45 to 54, investors allocate a larger share of their income, between 30 and 49 per cent, to investing – but nearly 70 per cent of their portfolios remain concentrated in the same instruments.

“Singaporeans are some of the most serious savers in the world,” said Chua Yi Wen, Singapore head of retail investment at DBS in an interview with The Business Times.

As at the first quarter of 2026, the country’s personal savings rate stood at 39.2 per cent of disposable income, well above the 7 to 15 per cent typically seen across the Organisation for Economic Co-operation and Development economies.

Chua noted that the report estimated that Singaporeans may require between S$550,000 and S$1.3 million for retirement, depending on their desired lifestyle and spending needs.

The estimate assumed that retirees draw down their savings over 20 years from age 65, based on spending patterns from the 2023 Household Expenditure Survey and annual inflation of 2.5 per cent.

Notwithstanding these retirement needs, many Singaporeans remain heavily invested in low-risk products.

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Despite being among the world’s highest savers, many Singaporeans could struggle to build enough wealth for retirement if they continue keeping too much of their money in low-growth assets, said Chua.

Why Singaporeans prefer safe assets

The preference for T-bills and SSBs is understandable, said experts.

So Sin Ting, chief client officer at wealth adviser and investment platform Endowus, said these products remain attractive because they are backed by the government, offer predictable returns and can be easily purchased through banking apps without requiring investors to make frequent decisions.

Many Singaporeans also have genuine liquidity needs, said Bryan Chan, solutions lead at wealth advisory firm Providend. Those in their 30s, 40s and early 50s often have to manage major financial commitments including housing loans, children’s education expenses and the needs of ageing parents.

“Holding cash or investing in liquid instruments is not necessarily the wrong decision,” he said. “Fixed income still has a role for stability, but the common mistake is treating T-bills and SSBs as a permanent home for long-term savings, rather than a temporary parking space.”

The latest SSB offers a first-year return of 1.52 per cent and an average annual return of 2.25 per cent over 10 years. 

Six-month T-bill yields have declined to about 1.56 per cent, a sharp reversal from the higher-rate environment that made these products especially attractive in recent years.

Singapore’s core inflation in June was 1.6 per cent. 

“As T-bill and SSB yields have come down from their peak, this is a good moment for investors to revisit whether their cash-heavy habits still match their actual goals, rather than anchoring to a yield level that no longer exists,” said So.  

Looking at other alternatives 

Chua said the bigger concern is not short-term market volatility, but the risk of failing to build enough wealth because too much capital remains parked in low-growth assets. 

“What we are concerned about is savings erosion in today’s high-liquidity, low-yield environment,” she said. 

Reginald Koh, founder of financial literacy platform The Financial Coconut, said that as interest rates moderate, the trade-off for staying too conservative becomes more apparent. 

Koh noted that returns from cash, fixed deposits, money market funds, T-bills and SSBs are likely to remain lower. If they fail to outpace inflation, investors could see their purchasing power decline over time. 

For investors with longer investment horizons, Dr Aurobindo Ghosh, assistant professor of finance at Singapore Management University, suggested considering a mix of equities and bonds that matches their risk appetite. This could include low-cost, passive investments such as exchange-traded funds. 

However, investors globally tend to under-allocate to equities despite evidence that stocks outperform fixed income over longer periods after adjusting for risk. 

“There are fairly standard personal finance rules with close to 80 per cent in equity over the longer term when one is young, and increasing the allocation to fixed income to 50 or 60 per cent by the time one is close to retirement,” said Associate Professor Anand Srinivasan, head of the department of finance at NUS Business School.

SMU’s Dr Ghosh said one reason is that many investors perceive equity investing as similar to gambling, while assuming that assets that earn around 2 per cent annually is sufficient when long-term inflation is at or above that level. 

“In terms of purchasing power or real rate of return, investors are surely going to lose as their nest-egg will have less purchasing power,” he added.

Still, not doing anything is even worse. One of the biggest mistakes many make, Koh said, is underestimating the power of compounding. 

“One or 2 per cent doesn’t sound like a lot when you are living day to day – but let that compound for decades, it will bite us back,” he said.

For younger investors with limited equity exposure, Dr Ghosh recommended starting with a diversified passive equity portfolio, such as an exchange-traded fund tracking a broad global index. Direct stock-picking, he said, may be more appropriate for more experienced investors.

“Different pundits would have different recommendations, some academic research suggests that equal weighting on different broad based asset classes like stocks, bonds and government securities might not be a bad idea,” said Dr Ghosh. He added that these are not investment recommendations, and individuals should seek professional advice based on their circumstances. 

DBS’ Chua suggested investors think about portfolios in three components: a defensive sleeve, an income sleeve and a growth sleeve.

Singapore investors, she added, already have a strong defensive foundation through the Central Provident Fund, which provides guaranteed interest rates of 2.5 per cent for the Ordinary Account and 4 per cent for the Special Account.

Providend’s Chan echoed this view, saying that building up CPF balances through working contributions and top-ups can “create a very strong base for wealth in retirement”.

Some also see selective opportunities beyond traditional portfolios.

Chua said investors could also consider a modest allocation to alternative assets such as gold as part of a diversified portfolio.

SMU’s Ghosh said it may also be a “good time” to buy corporate bonds to lock in higher yields before interest rates fall further.