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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 got 4 week T-bill, how to sell after 4 week? will I get any notification?
You don't sell it.
For Fidelity and Schwab, they send an email 3-4 weeks before it matures.
That is too early for me, so I have to put it in my calendar.
If you don't have Auto-Roll set, which is what I have, the T-bill goes into to the "cash" account.
I got the 4, 8 and 13 week ladder through Schwab. Does anyone know how to see the annual rate I got? It has the purchase price so I can do the math on my own, but there has to be a better way. I can't imagine they would expect users to calculate it ourselves.
You don't sell it.
For Fidelity and Schwab, they send an email 3-4 weeks before it matures.
That is too early for me, so I have to put it in my calendar.
If you don't have Auto-Roll set, which is what I have, the T-bill goes into to the "cash" account.
my T-bill are in E-trade so once it matures it will convert into cash in our account?
Not well. 14 days later the 6 month t-bill is over 5%
yea, its not a good idea to lock up your money for 1 year when the FED is still raising rates and they are expected to go over 5%. Better to just buy T-Bills which have daily liquidity.
I use Treasurydirect for T bills. If I use another broker like fidelity, are their rates better than going directly with the treasury?
No they are the same rates as at Treasury Direct if you're buying new bills. Brokers also have a market for resold treasuries so if you're interested in that or possible selling your own Tbill before maturity, you might use a broker instead.
Does anyone know how long Capital One holds your money before they add the funds to the cd ? They took the money via ach, out of my non capital one account on Friday and doesn't show available yet.
I have account Michigan bank how to transfer money to cd do I transfer to savings or checking first? My bank doesn't charge outgoing wire. Does capital one charges incoming wire?
I have account Michigan bank how to transfer money to cd do I transfer to savings or checking first? My bank doesn't charge outgoing wire. Does capital one charges incoming wire?
You need to open an account on Capital One, they will ask for the routing number and account# from your bank. Then they do a small deposit and you need to verify the amounts.
I have account Michigan bank how to transfer money to cd do I transfer to savings or checking first? My bank doesn't charge outgoing wire. Does capital one charges incoming wire?
You don't do wire transfers.
Most people do ACH transfers. Just open the CD and then you should get to the part where they ask you where the money is coming from. You'd link an external account for which you have routing and account numbers.
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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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That is not saying that will always be the case.
For Fidelity and Schwab, they send an email 3-4 weeks before it matures.
That is too early for me, so I have to put it in my calendar.
If you don't have Auto-Roll set, which is what I have, the T-bill goes into to the "cash" account.
For Fidelity and Schwab, they send an email 3-4 weeks before it matures.
That is too early for me, so I have to put it in my calendar.
If you don't have Auto-Roll set, which is what I have, the T-bill goes into to the "cash" account.
Not well. 14 days later the 6 month t-bill is over 5%
Not well. 14 days later the 6 month t-bill is over 5%
26-Week 912796Z36 02/16/2023 08/17/2023 4.840% 5.030%
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Not well. 14 days later the 6 month t-bill is over 5%
No they are the same rates as at Treasury Direct if you're buying new bills. Brokers also have a market for resold treasuries so if you're interested in that or possible selling your own Tbill before maturity, you might use a broker instead.
https://fixedincome.fid
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Most people do ACH transfers. Just open the CD and then you should get to the part where they ask you where the money is coming from. You'd link an external account for which you have routing and account numbers.
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