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.
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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!
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https://www.macrotrends
they doubled their money every 5 years for 30 years!! NO LIMIT and NO RISK!
If I buy at auction, I am the 1st owner of the bill/note/bond. I should be getting 100% of the interest paid by the bill/note/bond. TD had my money and supposedly bought my Treasury at auction. TD Ameritrade CSRs agreed with all this. However, on the IRS Consolidated 1099, TD Ameritrade reported accrued Treasury interest paid (some term like that). Accrued interest only happens when someone sells an interest bearing instrument between interest payments. So it implied that a 3rd party sold me the Treasury bill/note/bond, and I paid them accrued interest (and thus didn't pocket the whole Treasury interest reported to me). Ie it implied I didn't buy the Treasury at auction. But I placed a buy order for a Treasury at auction on the TD Ameritrade site, not on the secondary market, and TD Ameritrade agrees that I did make a purchase at auction. So why was I shorted accrued interest? This was buried deep in the little details of the 1099 small print, so easy to miss. Not sure how I saw it, but TD Ameritrade could not explain why I had accrued interest payments for a Treasury purchased at auction. I can only think some shenanigans happened. Anyway, long story but now I buy from Treasury Direct and won't have that funny middleman business to deal with.
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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!
I give you kudos though. I tried and gave up. Consider, for your sanity, doing the same
I applaud you for continuing your pursuit. The eventual understanding of the markets is the solution. I can promise you, mainstream media, SLICKDEALS are the wrong place to spend your time looking for educating yourself.
Best of luck
"Rate" refers to the coupon, and it uses the par value as a reference point. Par value is the amount received at maturity, 5% on $1,000 par value = $50/year.
"Yield" is a function of rate and also factors the amount of discount/premium paid for the bond. If a 1-year bond with a 5% coupon is bought for $800, the yield includes the $50 in interest + the $200 in appreciation via accretion, so the yield is 25%. If that same bond is bought for $1,050, the yield would be the $50 in interest - the $50 in depreciation via amortization, so the yield would be 0%.
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Diversification = mediocre performance. SP 500 currently yields 1.4%. If you own a dividend king/aristocrat stock paying north of 6% yield, then you will be way ahead after 20 years thanks to the magic of compounding interest. There is no management fee. Fed tax on qualified dividend is 0-20%.
If you want to talk about performance, high yield dividend stocks significantly underperform the S&P. Total return is more important than dividends. Ask AT&T.
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