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.
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!
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I wish I had checked them out before I invested with them.
Do "complaint sites" have complaints. Again, well, duh. But when you go to numerous sites and find hundreds of complaints, that can tell you a lot.
Nothing wrong with checking things out. Same thing I do before I hire ANYONE that I am going to give my money to.
You do what you want. My advice stands.
I wish I had checked them out before I invested with them.
Do "complaint sites" have complaints. Again, well, duh. But when you go to numerous sites and find hundreds of complaints, that can tell you a lot.
Nothing wrong with checking things out. Same thing I do before I hire ANYONE that I am going to give my money to.
You do what you want. My advice stands.
Although to me it looks like rates have peaked over the past few weeks.
Of course if the fed decides to raise interest rates again then they'll probably go up again.
And on the other hand if they're going to hold, maybe getting a long-term t-bill is the way to go, in case rates start to slip down over the next year.
I'm sure that wasn't any help.
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Now, say you also have a $1000 4 week bill that will mature on Tuesday. Fidelity will still lock up the money between auction and settlement, even though the maturing bill can be used to pay for the new bill. This can occur if you choose their Auto Roll option.
So, keeping bill purchases in separate brokerage accounts can be useful to avoid this problem. Fidelity accounts can be used essentially as checking accounts, so locked up funds could cause debits to be refused.
Although to me it looks like rates have peaked over the past few weeks.
Of course if the fed decides to raise interest rates again then they'll probably go up again.
And on the other hand if they're going to hold, maybe getting a long-term t-bill is the way to go, in case rates start to slip down over the next year.
I'm sure that wasn't any help.
Sure, you can try to guess out what the best term to buy is, but the longer the term, the more affected they are by unexpected rate changes.
Since this is part of my emergency fund, I'll keep the duration pretty short, a few months at most. Having a large enough emergency fund gives me more confidence to invest regularly and aggressively (primarily low cost stock index funds) in my long term investments.
Now, say you also have a $1000 4 week bill that will mature on Tuesday. Fidelity will still lock up the money between auction and settlement, even though the maturing bill can be used to pay for the new bill. This can occur if you choose their Auto Roll option.
Now, say you also have a $1000 4 week bill that will mature on Tuesday. Fidelity will still lock up the money between auction and settlement, even though the maturing bill can be used to pay for the new bill. This can occur if you choose their Auto Roll option.
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