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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Any reason to use SGOV, TBIL or XBIL over a MM?
https://www.bogleheads.
Disadvantages of Using SGOV as a savings account
https://www.bogleheads.
Short Term Treas ETF (SGOV) vs Money Market
https://www.bogleheads.org/forum/viewtopic.php?t=404440 [bogleheads.org]
SGOV vs mm in a taxable account
https://www.bogleheads.
The discussions in these boglehead are on topic and better informed.
2. I know what total return is... the fact you didn't realize absolute return is total return baffles me.
Not sure why you thought you had a 1-up. All you did was incorrectly classify a high-yield dividend stock and then stated it outperformed the S&P... I can pick many of those... One industry that has outperformed S&P, JNJ, and the Nasdaq, is Tobacco. The real dividend king is Altria Group. 8.53% dividend and price appreciation.
Nice try, you're a few decades away...
https://i.imgur.com/itZXz5d.png
I have MO. Also have PM, KHC, and MDLZ spin-offs. Sold KHC and bought back at a significant discount. JNJ is currently not a high-yield dividend king stock, but one can still trade the range 153-169.
Dividend king "socially responsible" JNJ is a well known company that should be added if the yield approaches 6%. Most people are uncomfortable owning tobacco with declining customer base.
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.
The only way you'd loose out on treasury bills is if the acutal US government defaults and that would cause so many dominoes to fall that loosing that money would be the least of your worries lol.
I have MO. Also have PM, KHC, and MDLZ spin-offs. Sold KHC and bought back at a significant discount. JNJ is currently not a high-yield dividend king stock, but one can still trade the range 153-169.
Dividend king "socially responsible" JNJ is a well known company that should be added if the yield approaches 6%. Most people are uncomfortable owning tobacco with declining customer base.
edit: i guess dividends are paid quarterly vs the 5.5% being an annual yield
$1000 * 5.484% (119/360) = $18.13
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$1000 * 5.484% (119/360) = $18.13
I have MO. Also have PM, KHC, and MDLZ spin-offs. Sold KHC and bought back at a significant discount. JNJ is currently not a high-yield dividend king stock, but one can still trade the range 153-169.
Dividend king "socially responsible" JNJ is a well known company that should be added if the yield approaches 6%. Most people are uncomfortable owning tobacco with declining customer base.
SDY is underperforming the SPY YTD... You were better off in those T-bills than you were buying "dividend kings", what a joke.
https://i.imgur.com/SS3wrcE.png
Bills are pure discount. They are money market. T-bills are different than T-bonds. The have no coupon and only pay on maturity... Here's the proof bud... Money market is 30/360 and ACT/360 100% of the time.
https://i.imgur.com/YaR4TBE.png
https://www.treasurydir
The yield curve is based on 365 only on securities 1+ year out. Aka non-money market securities. 1 - 12M bills is based on swaps.
https://www.treasurydir
If you want to place an order any time up to abut 8 weeks in advance, place the order at TreasuryDirect.
There's been lots of guides linked and mentioned in this thread on how to buy these at both brokerages and TreasuryDirect and the differences between them.
For example, a $1,000 at a 26 week rate of 5.499% yields $27.50 whereas Bask Bank at 5% yields $25.00. (Calculated using simple interest. I know compounding makes a difference, but my point is that there's really not a big difference in the return to justify the time/ effort involved in tying up your money.
The time I spent writing this is worth more than the $2.50 I'd gain per $1,000 invested by making such a switch.
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