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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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.
BTW, brokered CDs are the same or worse. They take the money when you click buy but sometimes don't settle for weeks so you lose way more.
Didn't realize this doesn't copy my original post but easy to find in the featured comments.
- You can buy much more than the FDIC limit, up to $10 million per auction.
- You can slightly defer taxes when buying later year. 26 week bills held to maturity will be taxed in 2024, while the same will happen with 17 week bills next month. Though the same is true of CDs that pay interest annually.
- You probably just need to set this up once at TreasuryDirect or your preferred brokerage, whereas you may need to open new savings accounts to chase the best rates.
BTW, money market funds at a brokerage and money market accounts at banks are very different though they use the same name. Had a big argument with a broker who insisted that money market accounts were not FDIC insured anywhere. They are at banks but it's a different type of account with the same name.
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To avoid confusion for users, you are referencing TD Ameritrade. I'm sure most folks are aware of this but your post is out of the original context so, it could be confusing. Again, your reference of TD is for TD Ameritrade and NOT Treasury Direct.
For Notes and Bonds, or Bills that aren't held to maturity, you'll get a combination of 1099-OID/INT/DIV depending on what happened.
You can use a Schwab money market fund to hold money to earn more interest, though you need to remember to manually buy and sell, which is more work.
I posted earlier about how you could lose access to funds between auction and settlement in a Fidelity non-margin account, so you may want to use a separate account for this.
https://slickdeals.net/forums/showpost.php?p=
Totally liquid and no penalties for withdrawals.
Schwab does have a bank but I only see low interest bank accounts from them or money market funds which should not matter if money is new or old. Thanks!
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For Notes and Bonds, or Bills that aren't held to maturity, you'll get a combination of 1099-OID/INT/DIV depending on what happened.
Schwab does tend to have the best prices that I've seen on the secondary market. So, if you want to buy or sell Treasuries at any time the bond market is open, instead of buying an auction, Schwab may be a good option.
You can use a Schwab money market fund to hold money to earn more interest, though you need to remember to manually buy and sell, which is more work.
Since secondary market takes a day to settle, you may want to purchase the day before it matures. Or you can place a manual auction order that settles on the day of maturity.
Right, Auto-roll places the new order to settle on the maturity date. It's described here on the Fidelity site: https://www.fidelity.com/fixed-in...ll-program [fidelity.com]
I posted earlier about how you could lose access to funds between auction and settlement in a Fidelity non-margin account, so you may want to use a separate account for this.
https://slickdeals.net/forums/showpost.php?p=
Know you can use margin but I hate to do that as it seems like even more work to avoid their fees.
At TD Ameritrade you have to look for new issues to find the auctions and at Vanguard you hit the top bar that says Treasuries on the CD landing page and you will see the auction choice.
Vanguard gives you till 9:30 but you can not cancel after 8:30. Frustratingly, Vanguard doesn't show your money in the settlement fund for 24 hours! I am told the money is there and you can use it, you just need to keep track of it yourself and will see negative numbers till the next day when the system rights itself. Have yet to try the other brokerage houses. Each seem to have their own quirks.
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