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Forum Thread
Treasury Direct TBills
January 3, 2024 at
09:37 AM
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Finance
Thread Details
Last Edited by slicbrat January 4, 2024 at 07:36 AM
I have been purchasing T-Bills mostly on 4 week term on and off directly on Treasury direct website. I would like to now contribute on a recurring basis and wondering how to go about doing that without losing interest between when I sell and then buy again.
When I go to the below page, the issue date is usually a week out and I do not want to lose out on a week or more worth of APR.
https://www.treasurydir
I also would like to maximize my APR. If the 8 or 17 or 26 week happens to pay better rate than 4 week, want to switch my investment to a better rate.
Curious to see if any of you are doing it on a recurring basis and if yes, how do you set it up?
When I go to the below page, the issue date is usually a week out and I do not want to lose out on a week or more worth of APR.
https://www.treasurydir
I also would like to maximize my APR. If the 8 or 17 or 26 week happens to pay better rate than 4 week, want to switch my investment to a better rate.
Curious to see if any of you are doing it on a recurring basis and if yes, how do you set it up?
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At this point, if you can afford to do so, I would recommend switching to longer term T-bills (17 or 26 week) as rates are beginning to decline. If you switch each of your 4 week T-bills to 17 or 26 week T-bills, you will essentially create a T-bill ladder locking in rates at the longer terms.
My 2 cents.
At this point, if you can afford to do so, I would recommend switching to longer term T-bills (17 or 26 week) as rates are beginning to decline. If you switch each of your 4 week T-bills to 17 or 26 week T-bills, you will essentially create a T-bill ladder locking in rates at the longer terms.
My 2 cents.
Thanks for your reply! I just went in again with a 4-week term but will plan on going longer term next. Hopefully the rates stay above 5.25% in the near future.
One additional thing I am doing in between my investments is put it back in a savings account that pays me about 5% (do have to pay state tax) in case if it helps others.
One additional thing I am doing in between my investments is put it back in a savings account that pays me about 5% (do have to pay state tax) in case if it helps others.
Use a 4.33% or higher Savings Account so that you earn only about 1% less on funds sitting in your high yield Savings before they are debited again from your savings by the Treasury.
How To Buy T- Bills at Fidelity & TreasuryDirect
https://www.youtube.com/watch?v=rFuiC-UNeMc
How To Buy T- Bills at Schwab
https://www.youtube.com/watch?v=mPWiEDl
When I tried this with J.P. Morgan - their rates were lower than official rates [when buying directly from the US Government], meaning lower than these rates:
https://www.treasurydir
Can you log into your brokerage and confirm the T-Bill interest rates are (slightly) lower on brokerages than they are when buying directly from the government?
When purchasing from the government directly, how can you tell what the purchase price is!?
They ask you how much you wish to purchase but that value is the value AFTER maturity.
In other words,
To illustrate, if you entered 100K purchase this week, the government would have taken out $99,588.94 out of your bank account.
So how did you know you needed to have $99,588.94 WHEN planning the purchase?
I mean this is crucial info when buying something.
How much do they want for it? The interest rate / price is not there on purchase page.
Only the maturity amount is being entered by you, 100K.
Then $99,588.94 is actually debited from you.
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https://www.treasurydir
UNITED STATES TREAS BILLS ZERO CPN
Maturity Date 02/27/2024
Expected Yield 5.335
Call Protected: Yes
Auction Close Date 01/25/2024
Settlement Date 01/30/2024
_ _ _ _ _ _ _ _ _ _ _
UNITED STATES TREAS BILLS ZERO CPN
Maturity Date 03/26/2024
Expected Yield 5.331
Call Protected: Yes
Auction Close Date 01/25/2024
Settlement Date 01/31/2024
_ _ _ _ _ _ _ _ _ _ _
Offerings change daily and this does not include 'secondary offerings' which I have not delved into.
I encourage you to call Fidelity. In my opinion they have excellent customer service. If they are unclear, call Schwab.
https://www.treasurydir
So if at at no point this week could you get 5.395% with brokerages, then you are getting a lower rate compared to buying directly from the Treasury.
When I asked, brokerages say "it's only" X lower but...
Meaning it's not lower by much, but...
Which confirms that when buying from the Treasury - you get the highest rate.
Even if it's not by much, but that 'not by much' adds up if you invest a lot and hold it for one single year, let alone multiple years.
It's indisputable math.
So if at at no point this week could you get 5.395% with brokerages, then you are getting a lower rate compared to buying directly from the Treasury.
Which confirms that when buying from the Treasury - you get the highest rate.
Here are the Fidelity Yields for the secondary offerings up to two years.
3mo - 5.35%
6mo - 5.23%
9mo - 5.00%
1yr - 4.89%
2yr - 4.83%
It's important for investors in the stock market to be able to sell a T-Bill and purchase securities on a moments notice.
Either way I think the brokerages don't want us dealing with the Treasury directly because someone is making small sums of money on those differences, but times gazillion so it adds up for brokerages.
When purchasing from the government directly, how can you tell what the purchase price is!?
They ask you how much you wish to purchase but that value is the value AFTER maturity.
In other words,
To illustrate, if you entered 100K purchase this week, the government would have taken out $99,588.94 out of your bank account.
So how did you know you needed to have $99,588.94 WHEN planning the purchase?
I mean this is crucial info when buying something.
How much do they want for it? The interest rate / price is not there on purchase page.
Only the maturity amount is being entered by you, 100K.
Then $99,588.94 is actually debited from you.
T-bills are bought at a discount value and mature at face value. When you purchase on TD Direct, they give you the average of the auction results on the listed auction date (which are done by large institutions usually). You will not know the actual rate until the auction closes. So if you wanted to buy 100k (using your example), then you need whatever amount of money that with the given rate annualized over the term of the T-bill would come to 100k. As such, you will not know the exact discount price beforehand. You can get a general idea usually by assuming the rate will be close to what the last T-bill that sold at that maturity was (it is not going to be drastically off). If you are at the point where a couple of hundred dollar on a 100k T-bill is going to make or break you in your decision, then you are buying too big a T-bill (buy a 95k one instead for example). Most people just assume that they need the face value in their bank account knowing they will need less in reality. It is just easier that way.
My 2 cents.