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Started By
Message
Treasury Bills, 101 me, Want to buy
Posted on 12/29/22 at 6:27 pm
Posted on 12/29/22 at 6:27 pm
So I have say $100,000 in a Fidelity acct to invest, this round. Will be retiring soon. Im tired of the market, and have no confidence in a rebound.
There are hundreds of T-Bills with rates now saying 2.5 to say 5.3 %.
Any recs on a particular T-Bill ? Zero coupon or no ?
I want to ladder several. Should I go with say 4, $20,000 Bills ?
Any better place to put this change with a better/safer rate ?
There are hundreds of T-Bills with rates now saying 2.5 to say 5.3 %.
Any recs on a particular T-Bill ? Zero coupon or no ?
I want to ladder several. Should I go with say 4, $20,000 Bills ?
Any better place to put this change with a better/safer rate ?
4
Posted on 12/29/22 at 6:40 pm to Drop4Loss
No place safer than Treasuries. I recently bought bonds from McDonalds, Lowes, AT&T, Verizon, Duke, JPM/Chase, and Disney at 4.85% to 5.15%. All bought at a discount from par. These will provide income and possible capital appreciation if rates drop. Still maintaining 60% equity investments. Will leave these bonds to the kids someday. Also some CDs at 4.65% for 1 year and some at 4.5% for 2 years.
This post was edited on 12/30/22 at 4:34 pm
Posted on 12/29/22 at 6:46 pm to Drop4Loss
One of our fellow posters linked this site awhile back. It’s a very good resource. I’ve used it to try to counsel a friend of mine and his wife.
How to buy Treasury Bills and Notes
I can’t advise on what you should do as far as maturities, but I’m also laddering into bills - have been for several months. With the higher yields and more favorable tax treatment, for excess cash, it’s hard to beat them vs. CDs and HY savings accounts.
I’m staying relatively short… 13 weeks was the longest I’ve purchased so far. Most have been 8 weeks. I’m expecting at least slightly higher yields/rates in the first quarter, and then I may put some of those maturing bills in 26 week and 52 week bills, and some into 2 year notes. If I can get 5% on the 2 year, I’d be content (as a replacement for some div stocks in my IRAs and HSA accounts).
How to buy Treasury Bills and Notes
I can’t advise on what you should do as far as maturities, but I’m also laddering into bills - have been for several months. With the higher yields and more favorable tax treatment, for excess cash, it’s hard to beat them vs. CDs and HY savings accounts.
I’m staying relatively short… 13 weeks was the longest I’ve purchased so far. Most have been 8 weeks. I’m expecting at least slightly higher yields/rates in the first quarter, and then I may put some of those maturing bills in 26 week and 52 week bills, and some into 2 year notes. If I can get 5% on the 2 year, I’d be content (as a replacement for some div stocks in my IRAs and HSA accounts).
This post was edited on 12/29/22 at 11:03 pm
Posted on 12/29/22 at 7:02 pm to Jag_Warrior
Not a bad plan at all. I bought longer duration because I think rates will probably stay up for a while, then gradually go down. If there is a significant increase I can buy more. As I am now retired, I felt it was time to shift from equities somewhat. I established positions in some dividend equity etf's. As individual dividend stocks hit my target, the proceeds will go in the etf's. Younger folks will probably be better served doing the opposite.
Posted on 12/29/22 at 7:30 pm to dwr353
Being that you’re retired, I like your approach.
I’m putting most of these (new issues) in my taxable options trading account. There’s nothing wrong with using Treasury Direct, but having marginable securities in a brokerage account where I’m not seeking to trade stocks, and they don’t affect my portfolio margin requirements very much, makes them attractive.
Looks like I’ve become my fiancée’s defacto financial advisor. So in her IRA, I’m looking at medium term Treasuries and corporates. For the corporates you mentioned, other than dealing with my brokerage’s bond desk, do you have any good resources to do searches for new or existing issues, maturity and yield info?
I’m putting most of these (new issues) in my taxable options trading account. There’s nothing wrong with using Treasury Direct, but having marginable securities in a brokerage account where I’m not seeking to trade stocks, and they don’t affect my portfolio margin requirements very much, makes them attractive.
Looks like I’ve become my fiancée’s defacto financial advisor. So in her IRA, I’m looking at medium term Treasuries and corporates. For the corporates you mentioned, other than dealing with my brokerage’s bond desk, do you have any good resources to do searches for new or existing issues, maturity and yield info?
Posted on 12/29/22 at 8:28 pm to Jag_Warrior
No, I used brokerage resources for the bonds.
Posted on 12/29/22 at 8:58 pm to dwr353
OK. Thanks. TDA assigned a bond specialist to me. Knowledgeable, but chatty. Said that he’d been like the lonely Maytag repairman during the low interest rate era, and now he’s getting to talk to people again. Kinda hoping to avoid him if possible. 
Posted on 12/29/22 at 8:59 pm to Drop4Loss
quote:
Any better place to put this change with a better/safer rate ?
You might want to consider a ladder of TIPS instead which currently have a "real" positive return above inflation. T-bills are nominal (not inflation adjusted) and are currently negative relative to inflation. I think TIPS make more sense if you are looking to actually spend this money sooner than later.
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_real_yield_curve&field_tdr_date_value_month=202212
I'm planning to retire within 10 years. My plan at retirement is to keep at least a 5 year TIPS ladder for my minimal yearly basic expenses. Lets say those expenses is X. Every year between a TIPS bond maturing and the other TIPS bonds paying interest that would cover X.
By using TIPS, X will be inflation adjusted every year and maintain purchasing power. So even in bad years, I don't have to worry about selling any stocks to cover my basic expenses.
As I get closer to retirement, I may decide that ladder to be more than 5 years. From what I've read over on Bogleheads, alot of people have this TIPS ladder extend until they start taking soc security.
Posted on 12/29/22 at 9:37 pm to gpburdell
I buy ours thru Vanguard. Super easy.
Posted on 12/30/22 at 7:33 am to bovine1
You can always pickup 3.75% in a MM with Fidelity while you wait.
Posted on 12/30/22 at 9:04 am to Drop4Loss
Not familiar with
TiPS
Will check em out
Inflation adjusted makes more sense
TiPS
Will check em out
Inflation adjusted makes more sense
Posted on 12/30/22 at 9:07 am to Drop4Loss
3-month and 6-month T Bills are yielding ~4.5%
Does that beat inflation? Eh, not really, not technically at least, but beats the hell out of cash (I've been sitting on 50% cash in my normal taxable account I trade most actively in).
Many brokerages offer these, you just might have to dig a little (i.e. don't go through treasurydirect website, it's horrible). Increments of ~$1,000 generally. I'm holding some 3-month bills in lieu of cash. I'll buy more in a few months, expect them to be yielding >4.5% by then.
Does that beat inflation? Eh, not really, not technically at least, but beats the hell out of cash (I've been sitting on 50% cash in my normal taxable account I trade most actively in).
Many brokerages offer these, you just might have to dig a little (i.e. don't go through treasurydirect website, it's horrible). Increments of ~$1,000 generally. I'm holding some 3-month bills in lieu of cash. I'll buy more in a few months, expect them to be yielding >4.5% by then.
This post was edited on 12/30/22 at 9:08 am
Posted on 12/30/22 at 9:13 am to Texas Tea 123
quote:
3-month and 6-month T Bills are yielding ~4.5% Does that beat inflation? Eh, not really, not technically at least, but beats the hell out of cash
It certainly beats the hell out of the stock market, too.
Posted on 12/30/22 at 1:58 pm to Drop4Loss
quote:
Not familiar with
TiPS
Will check em out
Inflation adjusted makes more sense
https://www.investopedia.com/terms/t/tips.asp
TIPS are similar to I-bonds but have some differences both pros and cons. The biggest pro is that you aren't limited to normal 10k/year like an I-bond. TIPS can earn a positive real return where I-bonds have a 0% real return. Also you can buy them at Fidelity etc. Biggest con is they are marketable bonds and price goes up and down with interest rate changes like other bonds. So it is possible to lose principal if you sell before maturity unlike I-bonds.
In my other post, that link shows you the current TIPS yield. It's ~1.6% right now for a 5 year TIPS. So you would get a real 1.6% annual return for 5 years. So lets say inflation is 5% the next year, then your return for that year should be around 6.6%. Each year the return adjusts based on inflation.
TIPS aren't good in a deflationary environment where nominal bonds would be better. No idea to know that ahead of time though. My plan in retirment is to have my bonds split 50/50 between nominal and inflation protected.
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