How should I buy treasury bills: using poems or direct to banks?

I am a regular at two main forums. One of them is Hardwarezone and the other is SgFunds. The interesting thing about forums is that there are many young people who are new to investments and they ask many "newbie" questions.

Newbie questions may be irritating to some but they are a veritable gold mine for me to write posts about personal finance because it allows me to know what people want to find out and hence by responding to their posts with answers, I also generate content for this blog!

It's a win-win situation!

Poems or Banks?
One of the questions that arise after new investors learn of treasury bills is how should they do their investing? Should they go through the bank or use Phillips securities Poems trading platform?

The main difference between buying from a bank and buying through poems is as follows:

1) Time
If you are working a day-job and hardly have time to go queue at a bank, it is better for you to invest in treasury bills using poems as you can do it online with a poems trading account. If you are a retiree or work flexible hours or afternoon shifts, you may want to consider applying for Singapore Treasury Bills or government securities direct through the banks as there are no commissions or charges by the banks as primary dealers. The bank is doing "national service" to process your application for Singapore treasury bills to the Monetary Authority of Singapore.

2) Cost
Poems levies a spread of around 15 basis points (0.15%) between the cut-off yield arising from the treasury bill auction and the yield that you get investing through Phillip securities. Hence, if you had applied for the treasury bill direct, you would have saved this 0.15%. If you are a small investor with a couple of thousand dollars, this does not make much of a difference. If you have a couple of million to invest, then you can probably afford to get someone to go down to the bank and apply for the treasury bill to save that 0.15%. :-)

3) Knowing the yield
When you buy treasury bills from poems, you know what is the cut-off yield (less 15 basis points). When you apply for the same tranche of treasury bills through the banks, you are basically going in "blind" as a small player, you want to get your allotment by accepting the cut-off yield after MAS matches the succesful bidders for the auction. Hence, if you think that treasury bill yields may go up or down and want to know what is the yield before locking up your funds for the next 3 months, you may want to consider investing in the treasury bills through poems after comparing the yield against what you can get from the best fixed deposits rates for the amount of funds that you have on hand.

Therefore, the answer to this question really depends if you have time, are concerned about the 15 basis points spread and you would like to know what the yield is before investing. How you invest depends on what is your objectives in approaching treasury bills.

Be well and prosper.