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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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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
maybe im missing the obvious but would reinvesting 15k in a 4 week tbill every 4 weeks do the same thing and only tie your money up 4 weeks at a time?
One can buy T-bills at no cost directly from Treasury Direct, a branch of the Treasury Department, at no cost from a bank account and reinvest the proceeds automatically.
Unless you are one of the folks who have problems setting up an account due to having to verify your identity. I am fortunate I was able to set my account more than ten years ago.
maybe im missing the obvious but would reinvesting 15k in a 4 week tbill every 4 weeks do the same thing and only tie your money up 4 weeks at a time?
Yes in a way but #1 you could cash out using secondary market if you REALLY needed to. And #2 if you really need the money in the next 4 weeks then you shouldn't be looking to invest in anything let alone a 11 month CD.
maybe im missing the obvious but would reinvesting 15k in a 4 week tbill every 4 weeks do the same thing and only tie your money up 4 weeks at a time?
Perfect candidate for laddering your savings. You'll get a slightly lower rate for doing the 4 week t bill. Or you could divide your savings and start different length t bills and have one mature every month. If you aren't in need of the savings that month, reinvest.
With all the talk about tbills, are you all worried about a possibility of a US default if congress can't play nice? I have a few tbills that mature in or before late April (no rollover) just to see how they worked and I'm wondering if I should build a tbill latter when they mature. Are you all not worried, or are you thinking "things are going to be f-ed anyway if the US defaults"
Returns are always based on risk. If they are having to pay 15%, it means people aren't sure they will get their money back. Similar to "junk" bonds in the US.
Not exactly. The CD rates (called CDT's in Colombia) are associated to inflation. Inflation in Colombia is now over 13%.
Just in case anyone is interested. Capital One is offering a $10 bonus for spending $15 when you use their shopping browser add-on. You don't have to be a Capital One cardholder either.
To qualify for this one-time bonus, you must be a new member, install the extension by clicking the link on this page, create an account within 24 hours of viewing this offer, and make Qualifying Purchase(s) totaling $15 within 90 days of installing. A Qualifying Purchase means a purchase via Capital One Shopping that earns Capital One Shopping Rewards. The bonus will be automatically applied to your account within 15 days.
Just in case anyone is interested. Capital One is offering a $10 bonus for spending $15 when you use their shopping browser add-on. You don't have to be a Capital One cardholder either.
To qualify for this one-time bonus, you must be a new member, install the extension by clicking the link on this page, create an account within 24 hours of viewing this offer, and make Qualifying Purchase(s) totaling $15 within 90 days of installing. A Qualifying Purchase means a purchase via Capital One Shopping that earns Capital One Shopping Rewards. The bonus will be automatically applied to your account within 15 days.
After $10 bonus automatically applied to my account, how can I use it?
I just got the offer in my email today and have yet to try it out. I would guess that once the $10 is added to your account you can use it the next time you shop online using their shopping browser addon.
its a very high likely hood as inflation is extremely high food prices went up 20-30% last year and this year its already 10% higher for many items at costco. and the year just started with oil prices at 60-80 only if oil goes up to 100 again inflation will go up 20-30% again and then fed funds will need to go up to compensate to decrease demand until inflation comes down.
remember to compare, same items not substitutes.
store brand items going up in price is also another tell
this will utterly destroy the housing market even more as no one but cash buyers can buy plus
auto market this locks out 95% of households.
since prices of houses are too high already and not worth the material and land they were built on. van life for 99% of the population is in order.
until landlords go bankrupt then fire sale the properties as they get vandalized to nothing as no one can afford the rent and cities become ghost towns as wages have not kept up with rents/inflation of real necessary goods and services people need to live.
this is a fact not conspiracy. I think you know the truth since slickdeals has near the real cost of items rather than the inflated prices of items.
Wow, and here I thought I was a Negative Nancy on the future state of the economy. Thanks for making me feel like Mr. Optimistic! I am, however, waiting for the real estate market to further tank before pouncing on an all-cash offer for my forever home.
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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.
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
maybe im missing the obvious but would reinvesting 15k in a 4 week tbill every 4 weeks do the same thing and only tie your money up 4 weeks at a time?
That is not saying that will always be the case.
Read the section How to Participate in Treasury Auctions.
https://www.investopedi
Sign up for a Slickdeals account to remove this ad.
To qualify for this one-time bonus, you must be a new member, install the extension by clicking the link on this page, create an account within 24 hours of viewing this offer, and make Qualifying Purchase(s) totaling $15 within 90 days of installing. A Qualifying Purchase means a purchase via Capital One Shopping that earns Capital One Shopping Rewards. The bonus will be automatically applied to your account within 15 days.
https://capitaloneshopp
To qualify for this one-time bonus, you must be a new member, install the extension by clicking the link on this page, create an account within 24 hours of viewing this offer, and make Qualifying Purchase(s) totaling $15 within 90 days of installing. A Qualifying Purchase means a purchase via Capital One Shopping that earns Capital One Shopping Rewards. The bonus will be automatically applied to your account within 15 days.
https://capitaloneshopping.com/lp...s=Feb_1_23 [capitaloneshopping.com]
Sign up for a Slickdeals account to remove this ad.
remember to compare, same items not substitutes.
store brand items going up in price is also another tell
this will utterly destroy the housing market even more as no one but cash buyers can buy plus
auto market this locks out 95% of households.
since prices of houses are too high already and not worth the material and land they were built on. van life for 99% of the population is in order.
until landlords go bankrupt then fire sale the properties as they get vandalized to nothing as no one can afford the rent and cities become ghost towns as wages have not kept up with rents/inflation of real necessary goods and services people need to live.
this is a fact not conspiracy. I think you know the truth since slickdeals has near the real cost of items rather than the inflated prices of items.