I have redeemed a $13.5k 2.9x% SSB this month in order to apply for the upcoming 3.4% SSB which is really attractive to me.
However, I wouldn't redeem my 3.1% SSB to apply for this because the interest rate gap is smaller, there is a $2 redemption fee, and more importantly, the risk that an overly large application may not be fully allocated. I think $20k or thereabouts is pretty safe but if too may people apply, there have been previous cases where the allocation was closer to $10k.
Strategy
As the 3.4% SSB provided an opportunity for me to review my cash/cash-equivalent holdings, this is probably a good time to summarise my strategy. Cash-equivalents are generally seen to be highly liquid holdings and while there are technical definitions out there, I adopt my own informal definition.
SSBs, which can be redeemed in about 2 weeks are cash-equivalents to me. The T-bill ladder I have is 'liquid' insofar as I can have access to $10k a month.
6 month T-bills: Cash bond ladder with $10k maturing each month. Total value: $120k
1 year T-bills: Cash bond ladder with $10k maturing each time. Total value $40k
SSB: $200k (Cash and a little bit of SRS)
Bank Account: cash float for monthly expenses, bill payments, etc.
Gold+Silver: I also have a collection of Gold and silver bullion, with the bulk of the value being in Gold bullion as Gold will keep on shining while Silver could oxidise ('milk spots'). I keep them in a low humidity dry cabinet but thats no guarantee where silver is concerned.
Gold Bullion if valued at spot prices is pretty liquid. I can sell gold bullion at spot faster than I can redeem a SSB, for example. However, this would only be for emergencies as a fairer value is more like the midpoint between UOB bid-offer price for Gold. But it will take longer to liquidate above spot
Planning for additional spending
One of the benefits of having a reserve in cash or cash equivalents is peace of mind that you can cope with expenditure volatility, which is something covered in a recent blogpost by Kyith from Investment Moats.
However, one should not overreact and think that one day, you will encounter a need to have immediate access to your cash, and you are given no time to liquidate. Kyith cites a T Rowe Price study which talks about roof repair which may be a sudden expenditure. As a condo resident, I'm glad I don't have to maintain a roof, but Singapore's weather is not as extreme as US or even Australia, where roof damage due to weather are more common (not just Tornadoes or Cyclones). However, its good to know that home insurance does cover damage due to extreme weather.
Anyway, back to the point about additional spending. The good news, TL:DR is that the study suggests that most of the expenditure volatility came from housing expenses which does not affect Singapore as much. We have a lower incidence of housing damage due to bad weather and fire than the US (though with all the news about battery fires it makes me wonder if we are catching up). Not to mention that most of us don't live in landed.
Finally, I suspect that most of the expenditure volatility is predictable. For example, Condos 'predict' that some sort of maintenance/ repair work will be done from time to time, and they may even have a schedule, so they collect S&C,, contributions to sinking fund, for this to be done. If the houseowner doesn't create his/her own sinking fund for the purpose of such maintenance/repair, then its on him.... there is nothing magical about landed, it needs repair/maintenance just like condo and HDB.
If I have upcoming predictable expendtiure, such as needing to change my car (since I just bought a car, not so soon), or maybe a major home renovation. I may start adding more to my T-bill holdings to take this into account.
