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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'm not convinced that is a full 5% as being advertised after the 11 months... The link here has an earnings calculator - https://www.capitalone.com/bank/c...-cd-rates/
It's showing as 4.57% not 5%? Am I missing something?
It's calculating for 11 months, not 12, since it's an 11-month CD. Results are correct.
Example: Enter $1000 and you'll get a result of $46
Just not in Florida. We bought a small beach condo in 2021 and held it 14 months and then sold. We made 80k on the sale but that's not what motivated us to sell. The condo that collapsed in South Florida was tragic for everyone but the ripple effect will be felt by other condo owners FOREVER. We got a notice not long after purchase that starting in 2024 all condo HOA's in Florida will have to be fully funded in case of emergencies. Ours was not fully funded and after hurricane Sally hit, the assessments started. The previous owner got hit with 18k before closing and we got hit with 10k right after closing. Then they raised the HOA dues on us. Then told us there was ANOTHER assessment coming for 2k per tenant.
Anyway, that's why we got out when we did. Real estate can be a great investment as long as you do your research. We did our research but the rules changed AFTER we bought.
How about IvyBank's Index Saving Account? Currently 4.71% APY with $2500 min deposit. The rate will be reviewed each month on treasury yield. I am just not sure about this bank since the reviews are not very consistent.
i'm not convinced that is a full 5% as being advertised after the 11 months..he link here has an earnings calculator - https://www.capitalone.com/bank/c...-cd-rates/
it's showing as 4.57% not 5%m i missing something?
He makes a valid point and his risk potential may be higher. 30+ years ago I walked into Prudential for a broker CD. The Prudential was pitching me to invest in stocks. I was a lot younger - all I could see was the safety and fixed interest rates. Now I have zero CD's - my investments are a lot more complicated and overall have done lot better than CD's. So don't just LOL just because you have your blinders on.
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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]
Sign up for a Slickdeals account to remove this ad.
It's showing as 4.57% not 5%? Am I missing something?
Example: Enter $1000 and you'll get a result of $46
Go to the third-party interest calculator here: https://www.axosbank.co
Enter $1000 for initial deposit, 4.89% for APR (results in 5.01% APY), 11 month term, compounded monthly, $0 monthly deposit. Result is $1045.75
I set mine up before all the 5+ years ago, but it is different now apparently with increased identity verification etc.
Anyway, that's why we got out when we did. Real estate can be a great investment as long as you do your research. We did our research but the rules changed AFTER we bought.
Sign up for a Slickdeals account to remove this ad.
it's showing as 4.57% not 5%m i missing something?
Sign up for a Slickdeals account to remove this ad.
He makes a valid point and his risk potential may be higher. 30+ years ago I walked into Prudential for a broker CD. The Prudential was pitching me to invest in stocks. I was a lot younger - all I could see was the safety and fixed interest rates. Now I have zero CD's - my investments are a lot more complicated and overall have done lot better than CD's. So don't just LOL just because you have your blinders on.