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!
FYI, to the person who asked about the 100,000 for three months. If you did the 13 week auction today you would get $1338 in interest at the end of the three months. Prorated per annum as per the person who posted above stated
Technically, you would pay $98,662 for the bonds and get $100,000 on November 9th. The difference between what you pay now and what the bonds are redeemed for in November is considered the interest.
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$1000 t bill matures today. The $1000 shows up in your account yesterday. You set up in advance the purchase of $1000 today. About $995 will be deducted from your account on Thursday.
Note: 'buy' first appears to be my bank's bad behavior, in an attempt to generate overdrafts (Ally). Of course, I keep enough on account to cover the momentary dip when the withdrawal to TD hits before their deposit.
How many bank went up in smoke last year? When was the last time the US government defaulted?
Federal reserve manages the money , it is independent from government
Note: 'buy' first appears to be my bank's bad behavior, in an attempt to generate overdrafts (Ally). Of course, I keep enough on account to cover the momentary dip when the withdrawal to TD hits before their deposit.
Most Californians don't know that in July, the power companies CAN impose a monthly tax of $130 for households that make $180K/ year. Those who make as little as $30K will also have to pony up more $ to pay for this power tax. AB250 was signed by Newsome and approved by those in Sacramento.
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$1000 t bill matures today. The $1000 shows up in your account yesterday. You set up in advance the purchase of $1000 today. About $995 will be deducted from your account on Thursday.
* $100 is minimum purchase, so may be more than you want, but if you sink $50k into a renewing purchase, the $100/month additional purchases will effectively be a compounding because you're just shipping back the yield payment they send you monthly on the big note.
The term "bankrupt" loses meaning when dealing with American dollars, the world's reserve currency. There is no higher, greater lender to turn to, no larger society to take pity and offer relief. The coming trouble is a reality adjustment, a penalty on the people for employing an irresponsible, chronically overspending government.
History has shown that when governments become insolvent, they either collapse (which is unlikely in our case) or hyperinflate their way out of the mess by printing money. Of course, the creation of more currency (that you touted) makes all existing money less valuable. Current dollars could end up being worth less than a dime, or even less than a penny. This will lead to 'new dollars' being issued, as has been done in other countries (new pesos, etc.).
Current projections for this fiscal year's interest payments are $1 T+, which is understandable in light of last year's $659 B, 2022's $476 B and $352 B in 2021. See the trend? The debt service is growing exponentially.
Meanwhile, US revenues are projected to be $4.74 T, up only 7%.
The key indicator to watch is not the GDP, as promoted by government leaders, but the cost of the debt service as a percentage of income.
Other governments worldwide have crashed when that figure approached 50%, Last year, ours was 14.8% (659/4440). This year, we're headed for 21% (1000/4740) conservatively, some estimates land at 22% or more.
It's easy to see that if current trends continue, the wave of darkness is only a few years away.
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When one buys treasury or money market at Fidelity, the $ goes to the US treasury or is pooled into a money market fund like FDLXX, which invest 98% of this money in US treasury. Fidelity is not in a money loaning business. Therefore, the risk of BK is next to zero.
If you bought a stock at Fidelity, and the stock goes poof, then you lost all your $.
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