At this point I think money in T Bills are as secure as money sitting in any bank. I can let my money sit in money market and make 4.25% or put in T Bills locking in for week making 5.3%. I would buy whatever at this point but nothing is certain.
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T-Bills
- Thread starter czub
- Start date
Here's a simple example, say you're buying a 1- year $10 note with a 10% discount and pay $9. The discount is 10% but your return is 1/9=11.1%.
Since these are all partial year investments, it's a bit more involved due to day count (actual, 360, 365, etc) assumptions and compounding.
The returns are always annualized as per convention. Same return % but a shorter note will get you fewer return $ but the same % return.
Laddering is a concept to take advantage of the upward sloping yield curve yet maintain the liquidity of a short term investment. With the current and near term curve, it's a moot point.
Nothing is wrong with 13 wk. I'll probably start going out longer once I feel the Fed is about done with the hikes.
There's no telling what the $ will be worth when you get it back, but you will get it back. They'll fight and posture over the debt ceiling but at the end of the day it'll get done and you will always get your money back because they'll never run out of digital ink.
This is not meant to be the core of your holdings. Buy stocks, land, gold, real estate, start a business, whatever you like and understand. This is to be used in lieu or in addition to banks for short/intermediate term cash when you need liquidity.
What happens if you keep waiting for this economic collapse and it never comes? At least this way you'll have some cash to deploy when there's a major asset fire sale.
I've been buying T-bills of various maturities for about a year now and no problems except I don't know how to compound unless I buy new T-bills with the interest that's deposited into my bank. Am I missing anything on Treasury Direct that would let me compound?
One thing I didn't mention is that T-Bills are as safe as the institution.
Also know that money in your bank is only insured up to $250K. Not that I EVER had that much money in a bank but I recently sold my house without buying a house so we could be a "cash" buyer and hopefully that will give us an edge to buy the next house.
The money from the sold house is in a 4 week T-Bill for two reasons. It's earning interest at a good rate and it's "protected" over the amount that my bank could have offered. I was facing opening new bank accounts so that the excess could be protected in case the bank failed. With using a T-Bill; well, I don't think the US will fail in the next 4 weeks. I mean, I hope not...
Also know that money in your bank is only insured up to $250K. Not that I EVER had that much money in a bank but I recently sold my house without buying a house so we could be a "cash" buyer and hopefully that will give us an edge to buy the next house.
The money from the sold house is in a 4 week T-Bill for two reasons. It's earning interest at a good rate and it's "protected" over the amount that my bank could have offered. I was facing opening new bank accounts so that the excess could be protected in case the bank failed. With using a T-Bill; well, I don't think the US will fail in the next 4 weeks. I mean, I hope not...
Tbills are also federally tax free dont forget then when comparing to a Bank CD
Thanks for all the info everyone, been lurking on the T-Bills for a few years. Other than the Fed protection on the $ vs internet banks failing why would someone go the T-Bill route over the current 5-6% one year CD rate?
