In the past, investing in Singapore Government Securities (SGS), otherwise known as Singapore Government Bonds or T-bills, require either a trip to a local bank for buying new issues, or transacting through a secondary dealer (eg a stock broker) for buying or selling of Government Bonds that were already in the market.
SGS are the safest products around as your capital is only at risk if the Singapore Government defaults. These debt instruments require a minimum investment of just $1000 and can be bought using both cash and CPF.
However, take note that if you sell them before maturity, you might get back more or less than your initial capital. This is because the price of bonds has an inverse relationship to the movement of interest rates. When interest rates goes down, the price of bonds goes up, and vice versa. The longer the duration of the bond, the greater this effect will be.
Starting from tomorrow, application for SGS can be done in a more convenient manner. All you need is a valid CDP account and you will be able to apply for new issues at the ATMs of the three local banks.
The yield of recent SGS issues are as follows:
3-month T-bill: 0.25% p.a.
1-year T-bill: 0.35% p.a.
2-year bond: 0.65% p.a.
5-year bond: 1.44% p.a.
7-year bond: 1.75% p.a.
10-year bond: 2.58% p.a.
Some of the yields of the SGS are at pretty low levels now. (You can view current and historical prices at the MAS data room)
For example, the 3-month T-bill was giving 2-3% p.a. as recently as 2006-2007. I remember it being a favourite instrument for some people to park their temporary cash. The only thing was that it was a hassle making a trip to the bank every few months. With the ATM system in place, things would be much more convenient.