Why is this is better than an ETF treasury fund, CDs, and high-interest savings accounts?
Answer: Treasury Bills "interest" is state & local tax-free on the money earned. So if you're in a high-income tax state and city they're worth it.ETF fund aren't always 100% in treasuries and charge fees.
Question (asked a dozen or more times in the thread) : How does bill interest work?
Answer: Treasury Bills "interest" is the difference between face value and purchase price. You buy a $10k bill at less than $10k, upon maturity, it is worth $10k. The difference between purchase price and maturity value is your "interest."
Tax Equivalent Yield Calculator For Savings Bonds, Treasury Bills, and Tax-Exempt Money Market Funds
https://www.mymoneyblog
How Buy and Sell Treasury Bills
https://thefinancebuff.com/treasury-bills-cd-money-market.html
When are the auctions? When can I place an order?
4, 8, 13, 17, and 26 week bills are auctioned every week.
52 week bills are auctioned every four weeks.
You can see recent results and the planned schedule at: https://www.treasurydir
4 and 8 week bills are usually announced on Tuesday, auctioned on Thursday, and settle on Tuesday.
17 and week bills are usually announced on Tuesday, auctioned on Wednesday, and settle on Tuesday.
13 and 26 week bills are usually announced on Thursday, auctioned on Monday, and settle on Thursday.
52 week bills are usually announced every 4th Thursday, auctioned on Tuesday, and settle on Thursday.
At a brokerage, you can usually can place an order between the announcement and auction.
At TreasuryDirect, you can place an order up to about 8 weeks in advance.
Leave a Comment
Top Comments
Treasury BILLS are currently paying over 5% for various maturity lengths under 1 year. These can be bought through most brokerages even without a TreasuryDirect account.
Treasury BONDS are paying 4% or less and have 20 or 30 year terms.
The 4 week bill ordering opens tomorrow 8/8, the deadline to buy it is sometime Thursday 8/10 morning depending on where you are buying it and it settles on 8/15.
On TD Ameritrade, they take your money on the 10th (take it out of the money you can trade with when you hit purchase which can be as early as the 8th) and buy the bill on the 15th during time which you earn no interest. Thus the reason that I stopped buying 4 and 8 week bills at auction. Secondary markets settle the next day so often a better deal. Treasury direct does not take the money from your bank account till the day it settles and Vanguard keeps it in the settlement fund earning interest till the day it settles as well. Not sure about the other brokerage houses. Also, not sure if you rollover the t-bills how the time between redemption and the next auction works as far as any interest you are losing as that is often a week of interest as well.
FYI, if you do the math, 4 weeks for $10,000 usually gets you about $40 in interest for letting them hold your money for 5 weeks.
The Monday auctions for 3 months and six months settle on Thursday so much less time to hold your money for nothing and less redemption downtime.
The money market funds often have repurchase agreements that are taxed at the state and local level but obviously more liquid. Am looking into the ETFs now.
Good luck to everyone!
782 Comments
Sign up for a Slickdeals account to remove this ad.
https://www.treasurydir
And a list of upcoming auctions here:
https://www.treasurydir
And generally, 13- and 26-weeks are on Mondays, 52-weeks, when held (once a month), are on Tuesdays, 17-weeks are on Wednesdays and 4- and 8-weeks are on Thursdays. Federal holidays will delay an auction by a day.
The 17-week bills were also issued weekly as a cash management bills before they were made permanent last year.
Backed by the US Govt.? The US Govt. is destroying the dollar and the whole world sees it.
The dollar is losing its value every day, buy all you can. The US Govt. will save you.
2. Those ETFs have an 7 - 13.5 basis point expense per year
If you compute the total return on those ETFs vs rolling a 1M, 2M, or 3M T-bill, you're looking at a material difference in return.
Sign up for a Slickdeals account to remove this ad.
2. Those ETFs have an 7 - 13.5 basis point expense per year
If you compute the total return on those ETFs vs rolling a 1M, 2M, or 3M T-bill, you're looking at a material difference in return.
7 basis points comes out to 7 dollars per $10K per year. If you're buying $3M in treasuries, something tells me you're not reading SD for financial advice.
Schwab is even worse. Best way is to use Treasury direct and automatic rollover no loss of interest days.
https://www.youtube.com/watch?v=W...p=2
If you are rolling at Fidelity, you may want to use a separate brokerage account for this so you can use the money between auction and settlement when rolling.
For buying in brokerage accounts I use Merrill Edge, Fidelity and TD Ameritrade. The Merrill Edge fixed income screener is very good. I've noticed recently that the minimum purchase amount is $10,000 for most (if not all) T-bills on Merrill Edge and Fidelity. Used to be able to buy T-Bills with a $1000 minimum. I avoid TD Ameritrade because they markup T-bill prices so the yield is lower.
Edit: SGOV also was 93% exempt from state income tax in 2022, and it can change from year to year.
Use above to calculate the true interest rate accounting for no state or local income tax on the earnings. In some states, effectively it's 1% higher than the bills return rate.
1) In a brokerage account you can sell treasuries prior to maturity if you need to for some reason.
2) You can't put a beneficiary on a Treasury direct account. At least I couldn't find a way.
3) If you ever have an issue absolutely forget about trying to call or email them. You are SOL.
My 2c
3) I was able to call and talk to a person sometimes, but I do agree that it's variable as other times I wasn't able to.
$1000 * 5.484% (119/360) = $18.13
Sign up for a Slickdeals account to remove this ad.
7 basis points comes out to 7 dollars per $10K per year. If you're buying $3M in treasuries, something tells me you're not reading SD for financial advice.
Selling the T-bill directly on the secondary market, you'll be seeing multiple sell and buy block sizes of $5 million - 150 million blocks per minute. with daily volume north of $500 billion. The ETF on the other hand the average volume on the etf is $5 billion, per day.
It's funny you laugh at 7 bps. In my line of work, 7bps is quite a few hundred thousand bucks, per trade.
Leave a Comment