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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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What's the problem with buying it on the secondary market ?
Quote
from warsaws
:
What's the problem with buying it on the secondary market ?
There is no "problem", but TurtlePerson2 did not buy a new issue T-bill today.
There was not an auction today.
My post was to clarify what he did.
In addition, unless the description says UNITED STATES TREAS BILLS ZERO CPN, he didn't buy a T-Bill.
The two T-bills that are shown Fidelity's website, both have yields that are below 5%.
Also, to get 4.940% Ask Yield to Maturity, he would need to buy 1000 x $1000 = $1M
How many days. I put 10$. Now it won't let me do anymore.
You would need to open another CD if you want the CD to have more than $10 earning the 5%.
A CD certificate of deposit is not a money market or savings account.
I realized this now. So I can do multiple cds so if I need the money I only lose on that cd. So 5 10k cds are better then 1 50k cd. Am I correct?
5 will give you some protection against huge penalties. Or you could go the t bill route and ladder your accounts to mature every month. Not quite 5% but no state/local tax. Probably a wash in the end.
I realized this now. So I can do multiple cds so if I need the money I only lose on that cd. So 5 10k cds are better then 1 50k cd. Am I correct?
Yes, if you need to break a CD to get money for an emergency.
In your 5 CD scenario, if you need $10K, you would only need to break one CD and be penalized. The other 4 are untouched.
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.
as you read cpi reports its 99% confirmed inflation is still extremely high I frequent costco and discount stores so I know they are raising prices on essential goods by 10-20% already.
This means inflation up.
they tanked oil prices without dropping gas prices by that much.
oil may need to go below 50 dollars if they want to decrease inflation further.
otherwise food inflation and rent inflation are too high.
Please excuse my ignorance but what is the corporate (A/A) that yields 6.70% 1yr? TIA
Quote
from nyc10036
:
corporate bonds
A/A is the bond rating
To add to what nyc said, while T-Bills are backed by the US gov.'t and therefore considered as safe as FDIC for banks, corp. banks have no guarantees. In the event the company goes bankrupt, which would be very unlikely for those with A/A bond ratings, you could lose your money.
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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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When I click on the 5.01% and log in, I get taken to secondary market T-Bills.
It looks like rates have fallen slightly since this morning, but I still see the 1 year above 5%.
What is the CUSIP that you bought?
https://www.investopedi
There is no "problem", but TurtlePerson2 did not buy a new issue T-bill today.
There was not an auction today.
My post was to clarify what he did.
In addition, unless the description says UNITED STATES TREAS BILLS ZERO CPN, he didn't buy a T-Bill.
The two T-bills that are shown Fidelity's website, both have yields that are below 5%.
Also, to get 4.940% Ask Yield to Maturity, he would need to buy 1000 x $1000 = $1M
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A CD certificate of deposit is not a money market or savings account.
In your 5 CD scenario, if you need $10K, you would only need to break one CD and be penalized. The other 4 are untouched.
Getting your money is not instant; it is 2-3 business days.
https://www.capitalone.
If you need the money, "right now", then you need a brick and mortar bank.
https://fixedincome.fid
Please excuse my ignorance but what is the corporate (A/A) that yields 6.70% 1yr? TIA
A/A is the bond rating
This means inflation up.
they tanked oil prices without dropping gas prices by that much.
oil may need to go below 50 dollars if they want to decrease inflation further.
otherwise food inflation and rent inflation are too high.
wages need to go up another 20%
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A/A is the bond rating