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So I started to ladder T-Bills for the reasons everyone is stating in this thread. The rate is so volatile (in a good way) that locking into anything even 12 months is too long for me and rates continue to climb. I use fidelity and my suggestion is this.
When they offer the new 4 week and 8 week and 13 week t-bill (they auction on diff days and diff weeks) go in and buy one of each of them with whatever money you can spare. Let's use 5k for each.
I would buy a 4 week t-bill with NO Rollover for 5k
I would buy an 8 week t-bill with NO Rollover for 5k
I would buy a 13 week t-bill WITH Rollover for 5k
Then after 4 weeks when that first on comes up, buy another 13 week t-bill with the 5k WITH Rollover.
Then after 8 weeks when the second comes up, buy another 13 week t-bill with the 5k WITH Rollover.
Now you will have 3 13 week t-bills rolling every 4 weeks or so and rolling into a new one with the proceeds. This way every 4 weeks you are capturing an increasing rate and not locked into anything longer than 13 weeks. You benefit from the rate hikes, can cash out at any time, and you have state tax shelter from the earned interest.
I can almost guarantee that the above will yield you more net income (taking in tax break) at the end of 11months then the 5% locked CD
just my 2cents
You can buy treasuries from just about any brokerage. I use Fidelity, as I like their platform and they don't charge fees/commissions for treasuries. Fidelity Fixed Income Page[fidelity.com]
Follow the above link and scroll down to the row "U.S. Treasury." Choose the duration you want and click on it. You can then click "buy" to start a trade of a specific treasury bill/bond. Fidelity's Intro to Treasuries[fidelity.com]
This is true, but it doesn't make an 11-month CD at 5% a bad idea. Those HYS can change their rates at any time, but here you're guaranteed to get 5%.
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I signed up for Robinhood gold which gives you 4 percent yield on the cash shitting there. If you put in a big enough amount the 5 dollar per
Month fee is neglible.
I have couple questions I have money in Michigan bank here CD rates in my bank 3.1 percent. Since there is no capital one bank closeby. First do I open CD first or checking or savings account. Does capital charge any wire fee for incoming or outgoing. For example After 11 months if cd rates goes up to 7 or down to 1 percent I can close account and transfer to my Michigan bank? Minimum balance in checking or saving account any monthly maintainence fee?
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02-02-2023 at 04:37 PM.
Quote
from WiseDolphin8928
:
UFB offers a great rate and then lowers it a bit later. Happened to me before so I swore never to use them
UFB Direct is good but there is a big gotcha - they regularly change the name of the savings account "Great Savings" , "Elite Savings", "Best Savings" etc. The newest account name offers the newest, highest rate but older names are left at the older, lower rates, forever. You can call however and immediately get it switched to the new titled status without a problem, keeping the same account numbers, etc. I have done so at least 4 times now.
I have couple questions I have money in Michigan bank here CD rates in my bank 3.1 percent. Since there is no capital one bank closeby. First do I open CD first or checking or savings account. Does capital charge any wire fee for incoming or outgoing. For example After 11 months if cd rates goes up to 7 or down to 1 percent I can close account and transfer to my Michigan bank? Minimum balance in checking or saving account any monthly maintainence fee?
You should be reading all the info you need on the Capitol One website, not asking on Slickdeals!
I will tell you the trick is to buy T bills at one month interval and set auto roll. As long as Fed hikes rate, you would get better rates and at the near end I would move money to long dated CD by laddering them to expire at different maturity or buy 1y/2y t bills. SoFi rate is decent on checking and saving as a bank for day to day transactions.
I hold a massive portfolio of bank accounts.
i looked into treasury direct for t-bill but gave up bc it looked complicated. I have to see how its done thru Fidelity.
I have couple questions I have money in Michigan bank here CD rates in my bank 3.1 percent. Since there is no capital one bank closeby. First do I open CD first or checking or savings account. Does capital charge any wire fee for incoming or outgoing. For example After 11 months if cd rates goes up to 7 or down to 1 percent I can close account and transfer to my Michigan bank? Minimum balance in checking or saving account any monthly maintainence fee?
open account with cap1 then add michigan as an external bank, you can transfer in between no fees. No min balance with cap1 accounts, empty your account and closed.
since fed funds rate is now 4.75 and feds increasing it to 5.00 next month then 5.25 and 5.5 following months
11 month is too long. rates could be at 6%+ by then.
I would instead do 3 month terms if you need interest rates.
treasuries are at 4.5% but likely will go to 4.75 soon.
that would be the same thing with 3 m terms.
or 6 months at 5%.
since fed funds rate is now 4.75 and feds increasing it to 5.00 next month then 5.25 and 5.5 following months
11 month is too long. rates could be at 6%+ by then.
I would instead do 3 month terms if you need interest rates.
treasuries are at 4.5% but likely will go to 4.75 soon.
that would be the same thing with 3 m terms.
or 6 months at 5%.
this is a bad deal if you are financially aware.
You could make some serious bank using your crystal ball!
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When they offer the new 4 week and 8 week and 13 week t-bill (they auction on diff days and diff weeks) go in and buy one of each of them with whatever money you can spare. Let's use 5k for each.
I would buy a 4 week t-bill with NO Rollover for 5k
I would buy an 8 week t-bill with NO Rollover for 5k
I would buy a 13 week t-bill WITH Rollover for 5k
Then after 4 weeks when that first on comes up, buy another 13 week t-bill with the 5k WITH Rollover.
Then after 8 weeks when the second comes up, buy another 13 week t-bill with the 5k WITH Rollover.
Now you will have 3 13 week t-bills rolling every 4 weeks or so and rolling into a new one with the proceeds. This way every 4 weeks you are capturing an increasing rate and not locked into anything longer than 13 weeks. You benefit from the rate hikes, can cash out at any time, and you have state tax shelter from the earned interest.
I can almost guarantee that the above will yield you more net income (taking in tax break) at the end of 11months then the 5% locked CD
just my 2cents
Fidelity Fixed Income Page [fidelity.com]
Follow the above link and scroll down to the row "U.S. Treasury." Choose the duration you want and click on it. You can then click "buy" to start a trade of a specific treasury bill/bond.
Fidelity's Intro to Treasuries [fidelity.com]
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Month fee is neglible.
Our community has rated this post as helpful. If you agree, why not thank crisplyvague
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I hold a massive portfolio of bank accounts.
It is neck and neck with wells fargo
11 month is too long. rates could be at 6%+ by then.
I would instead do 3 month terms if you need interest rates.
treasuries are at 4.5% but likely will go to 4.75 soon.
that would be the same thing with 3 m terms.
or 6 months at 5%.
this is a bad deal if you are financially aware.
Just got some T-bills at fidelity. Straight forward with auto roll
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11 month is too long. rates could be at 6%+ by then.
I would instead do 3 month terms if you need interest rates.
treasuries are at 4.5% but likely will go to 4.75 soon.
that would be the same thing with 3 m terms.
or 6 months at 5%.
this is a bad deal if you are financially aware.