What Is A Treasury Bill 2022 | Top 9 Things You Should Know About T-Bills
ฝัง
- เผยแพร่เมื่อ 28 ส.ค. 2024
- Treasury bills explained! In this video (What is a Treasury bill 2022 | Top 9 Things You Should Know About T-Bills), I’ll answer the most common questions folks have:
✅ What is a T-bill
✅ How do treasury bills’ interest rates, principal & price work together
✅ How do treasury auctions work
✅ Treasury bills: how to buy
✅ Can you buy treasury bills/ buy treasuries in the secondary market
✅ Are treasury bills’ investment subject to federal income taxes
Sources:
home.treasury....
www.treasurydi...
www.washington...
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The secondary market for T-Bills is only liquid if you're buying/selling at least $50k or higher. For anything less than that amount, you may have a difficult time getting your order filled. You certainly won't get your order filled instantly, it will just sit there until(or if) it gets bundled up as part of a much larger transaction. The market makers are looking to fill very large institutional orders and have the right to completely ignore your order, including a market order. For most people watching this, buying and selling T-Bills on the secondary market is going to be frustrating, better to use Treasury Direct. Even if you're trading more than $50k, don't expect to get your order filled right away in the secondary market. Recently issued 2, 3, & 5-year Notes, have better liquidity for smaller traders than T-Bills do.
Your videos are a life saver. I have been a stay at home mom for decades and recently became a single mom. I'm now working hard to get back on my feet to support my children. Thanks so much for your great teaching videos. You have no ideas how much impact you have made for me and my children. Thanks!
Glad you’re enjoying the videos & best of luck!
Every time I watch a video from this channel, I learn something of value. The content is cogent, concise, and insightful. I am glad you present information in ways that newbies can understand. Thanks.
DITTO, great job Jennifer!
Earlier last year July I bit 1,000 dollars, then after one week I bit another 2,200 dollars , making it a total of 3,200 dollar, after 24 hours I got offfront of 399 dollars payment, so the end of the tenor of the bit was 250 day's, so early this year I asked for withdrawal request for capital and profit then T/Bill's asked me to bit 1,000 dollar for me to get my money back, so I don't understand why, because I have 8,272$ in my broker account
@@djahajeanclaude2988 so u had to bid in order to redeem ? interesting...
I love your videos and learned a lot about t-bills from them. Quick add -on , I use HSA funds to buy my T-bills through fidelity, Like Roth funds in HSA grows tax free.
Thanks for visiting our personal finance channel! We hope this free content will help fast-track your financial journey! Everyone's financial journey is different. Please note that there are questions/ comments which I will not be able to answer without fully understanding your financial, personal & other circumstances.
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Really like this channel, you do an excellent job!
This is such a great video. Thanks
As I am getting closer to retirement, I am thinking about buying T bills
Hi, Jennifer: Thank you so much for your excellent videos! I've learned so much from them. Your enthusiasm really comes through. I bought my first I-bond and T-bill because of you.
I'm happy the tutorials have been helpful
Holistically, what you are doing is applying techniques that Americans SHOULD of done in the Carter years (high inflation and market uncertainty) to today's similar environment.
Its great advise. Keep it up. Keep smiling.
Most people, especially the younger ones who've only seen the stock market growth in the past decade or so, have no idea what the Carter years were like
You are a great teacher, thank you so much for allowing me to finally understand bonds :)
Another benefit of new issues is you can roll your $$ into the next new issue by checking a box at time of purchase. Makes it much easier to build a ladder. Secondary issues you can’t do that. Other than that, secondary market and new issues can be VERY similar, almost negligible difference in YTM from what I’ve seen
Thanks for sharing
Video was the perfect length as my attention span can be very limited. Subscribed! Thank you
I'm on the T-Bill crash course with you tonight! 😄
Thanks for your videos. Very informative. I bought 10k of ibonds after watching your video. It was a PIA to open a treasury direct account. But easy to use after opening. I’m going to buy some T bills in a few weeks. Thanks for info.
Glad you enjoyed the video!
Love your educational videos.
Could you please explain why (and for how long) do you expect interest rates to keep going up (for people like me, who know nothing about economics but try to make sense of all the good info that you provide)? Thank you for all you do.
Thanks guys. FYI, I talk about this briefly in this section of another T-Bill video: th-cam.com/video/__oqvdtLoiE/w-d-xo.html
Jennifer, Thank you so much for helping me navigate through the purchase of the T bills. You are a Diamond!
17 weeks are coming.. I’m buying some of different kinds each time.. that way I can have a pretty good interest rate as well as having liquid money in case to use. Otherwise, I can just invest it again. 😊 Hopefully by the end of the year (0.75 in November and 0.75 in December), the rates will shoot over 5%. 🎉
Thanks for sharing
Your videos are excellent. One suggestion that I was taught in a presentation seminar: a good instructor/speaker understands that an audience cannot really read and listen at the same time. Any words you show in your PowerPoint or video, you should also read out loud, or pause to give the audience a chance to read it. Otherwise, the viewer has to pause the video, read what you're talking about in order to catch up, and then rewind the video a few seconds. It is fine-tuning your great skill, but it would be an improvement. Keep up the GREAT videos!
Noted - thanks
Wow, glad I found your channel. I obviously could learn a ton from you and hope to do so. Thanks!
Very Helpful!
Thank you for the video. It’s very informative. Will you do a video of how to buy Tbill with Vanguard?
Yes - hopefully in the next week or so!
thanks, crystal clear. And excellent information. I just bought a 13 week T Bill. Finally getting a little something for our cash. Although our ETF's....ugh!
Happy to hear the video was helpful in understanding T-Bills
i used schwab on a recent t-bill purchase and the contract was .13% greater than expect.
Really enjoying your videos! Smart, concise, and full of the best tips. After watching ladders, I came away wondering why anyone would buy long dated bonds. I’ll bet you could answer that. 😉
Always worth listening to everything on your channel
You're awesome, thanks for sharing your knowledge! I have a question regarding why we should buy t-bills terms over 4 weeks. If I can purchase a 4 week t-bill @ 3.6%, why would I buy an 8 week t-bill for 3.9% when I could have gone through two investment periods @ 3.6% for the same amount of time, plus used the interest I earned to invest more? In my mind, purchasing a 4 week t-bills allowed me to make money twice, unless the 8 week t-bill has an interest rate that's double the 4 week t-bill. Am I missing something?
all yields (interest rate) are annualized numbers.
I’ll have a video coming out shortly with more details on pricing, interest, etc
Thank you. Much appreciated.
You guys are awesome.
Best, most precise information out there....Thanks so much. I've turned a few friends on to your suggestions. Thanks again.!!
You‘re welcome!
Hi ! Just found you after hearing about you on Suze Orman podcast . Thank you for the info !
Superstar of Rock. Loving your Post. Excellent .
Very informative. I have referred others to your site as I was referred.
Jennifer - awesome info. Thanks!
Security Type: 4-Week Bill
Par Amount: $20,000.00
Purchase Price: $19,920.82
not anywhere near the advertised rate of 5%
All the recent auctions & secondary market results have been above 5% for T-Bills under 52 weeks. Investment rates are annualized.
I love your videos Jennifer. I am learning so much. My question is where would the interest from T bills go? The money/principle came back to my bank checking account.
Thanks Jennifer 👍
You are a great “how to” channel, so this is more of a “why it’s this way”
2 headlines
“Is This The Worst Year Ever For Bonds?” - Forbes 9/22/2022
“‘Revenge of the Savers’: Fed rate rises offer a boon to the cautious” - Washington Post 9/21/2022
If you could explain how both headlines could be correct, that could be a good topic.
Our T-Bill videos thus far cover the second one. The first one requires more than one video to explain. It's already on my longlist.
Bonds have had a very bad year this year. Once you buy a bond, you can resell it on the secondary market, if you feel you can get a better return somewhere else. When bond rates go up consistently, and when the Fed is saying they are going to continue to go up, why hold old bonds with low yields? So people are selling their old bonds. This rush to the exit is driving the price of bonds in the open market down. Thus, the marketable value of bonds have been very bad as the rates rise.
Hi! Love your channel! When trying to determine which yield our T-Bills got on the TD announcement page, do we focus on the High Rate or the Investment Rate? I don't know which rate applies to the outcome of the auction for our non-competitive bids. Thanks for any help on that! :)
As I understand it, the high rate is what everyone gets at a particular auction & the investment rate is the annualized rate of return based on the bill’s purchase price - what you would use to compare with other investments.
@@DiamondNestEgg Thank you so much :)
Thanks again for sharing. Good explanations.
Thanks for sharing the info! Very helpful!
Some noob questions: I bought a 3-month T-bill on schwab ($5,000), it says Market Value $4,968.76, cost basis $4,940.85, how should I calculate the yearly interest rate here? Is it (4,940.85 - 5000)/4,940.85*4 or (4,940.85 - 4,968.76)/4,940.85*4 or something else? Thank you very much for the answer!!!
Thanks!
You’re welcome!
You are an amazing presence on You Tube and a tremendous inspiration. I purchased two iBonds (myself and daughter) per your recommendation. Question: I just purchased a 26-week T bill from TD. The interest rate is 3.981%, price per $100 is 98.053611. What will be my ROI when it matures?
The investment rate column for your corresponding security shows you the annualized rate of return:www.treasurydirect.gov/auctions/announcements-data-results/
This channel is amazing. New to all of this. Is buying and selling through the brokerage firms considered the secondary market?
Hi. This video explains the difference between buying at auction vs the secondary market. You can do both through the brokerage firms. th-cam.com/video/rFuiC-UNeMc/w-d-xo.html
No. You can buy *both* new-issue T-bills and secondary-market T-bills through brokerage firms. When you make your purchase, make sure you go to "Auction" to buy new issues.
Fantastic content. Very informative. What of the Pat value if full price and not discounted rate, will I still get the yield amount in interest?
Thank for the updates and details explanations!
Great info. Thanks!
Your videos are great, I have learned so much thank you. One question, if I submit a purchase in advance of a new issue, is there a period where I can change my mind or am I “committed” at that point in time?
Yes, but the "cut-off" times for order cancellation/ changes vary depending on who you're purchasing through. I know I couldn't change my order with Schwab the night before a recent auction without calling in, so would suggest you reach out to whoever you're purchasing through & ask what their cut-off time is for changes/ cancellations.
The way you explain the intricate details of these perplexing points are very helpful. Will the broker hold the Par value of the money until maturity or would they debit only purchase amount after the competitive rate is determined?
Very interesting. Good video.
Great video....can you teach us where is the auction website pls.
Hi Jennifer - Love your channel! Question: On TD's Results page, there are two rates listed for T-Bills (and Bonds/Notes). One is the High Rate and the other is the Investment Rate. What is the difference between the two?
Thanks! I'll have a video on this soon - I'm hoping this week
Great info!!! Question, on maturity date does the t-bill automaticly sell or do i have to physically sell it myself?
You don't have to sell - the proceeds go back to your designated account at maturity
@@DiamondNestEgg Thank you!
Hi Jennifer, great tutorials! My question is this. I buy T-bills let’s say and I choose not to roll it over automatically through “Fidelity “. What happens when the t-bills reach maturity? Do I get paid my investment plus interest to my account?
Now, if I choose auto roll over through “Fidelity”, the way I understand it, Fidelity will roll the t-bill into another 4, 8, 13, 26, or 52 wk t-bill depending on what I purchased previously. Is that correct? What about the interest rate of the new t-bill rolled into? I am very new at this and I’m trying to grasp what will happen to my investment. Thank you for doing these videos.
1. At maturity, the proceeds go back to the account you purchased them in if you're buying via a broker. With TD, you designate the (bank) account where the proceeds should go to.
2. If you're buying at auction, you do not know what rate you will get beforehand regardless of whether auto-roll is turned on or not.
Very informative video
Hi, Jennifer: A question on taxes on T-Bills bought at auction. If you buy a 52-week T-Bill in (for example) June, 2023 and the "interest" is paid in June 2024, do you pay taxes on the full interest payment in 2024 only, or are you required to pay taxes on half of the interest in 2003 and half in 2004?
Assuming you hold to maturity, 2024
Thank you!
Based on the Fed's last meeting dot plots and Powell's comments during the news conference, their plan appears to be for at least 3 more hikes, so wouldn't it make sense to use shorter term bills until they're done and go on "pause"? The 4 week is pretty close to the 7 day SEC yield on my Vanguard federal money market fund's 7 day SEC average-2.66 vs 2.47, but in looking at the differential between the 8 week and the 13 week-3.16 vs 3.18 as of last Friday, I'd be inclined to go with the 8 week bill at this point.
Thanks for sharing your perspective
Forgive me I’m new to this but let me pose this question. So how is it better to do a 26-52 week t-bill when you can do a 4-week bill and get the same amount in only 4 weeks? Why wouldn’t you just do that over and over every month? Even if the yield went down to 2.5% you would still be making way more money after that year than you would if you invested in a 26 or a 52 or really anything after eight weeks? Am I missing something?
Shout out to r/dividends for the channel recommendation. You’re awesome! Thanks for doing this.
Is the T-Bill duration limited to 56 weeks. Always hearing about 2 and 3 year Treasury Bills. Are these new bonds auctioned? Thanks for all the great content.
The longest maturity T-Bill is 52-weeks. You can find 2 & 3 year T-bonds on the auction schedule: home.treasury.gov/system/files/221/Tentative-Auction-Schedule.pdf
I can't get the expected yield rate from Schwab, but I can get the evaluated price instead.
You didn't explain that the yield is based on a yearly figure regardless of maturity. So at end of maturity on 1 month bill, you receive the yield divided by 12.
Thank you for the great content!
Once I purchase an 8-week T bill, can the value/interest go down during the 8 weeks if I hold to maturity? I hope this is not a silly question. I am new to all of this. Thanks.
On a day-to-day basis, if you are watching your T-Bill, there will be changes in your account, but if you hold to maturity, none of this matters as you will get back your face/ par value.
Hi Jennifer, two questions: 1) If I buy a 4 week T-bill, does it pay 4 weeks after the Auction Date or the Settlement Date? 2) if I select the "Auto Roll", does it get reinvested on that 4th week (same week as the settlement date) or is it the following week? Thanks!
The easiest way to look at is that your 4-week T-Bill pays on the maturity date which you can typically find in the description when you purchase it & on the maturity date, it reinvests into whichever 4-week T-Bill settles on that date.
@@DiamondNestEgg Bought a T bill for 15 k and got back 15k. Do not see the interest. Where does it usually go?
@@ea7065 Impossible. You bought it at a discounted price (14.9xx) and you got the 15k when it matured. The difference is the earned interest.
My broker is Interactive Brokers LLC. I have not figured out how to join the weekly auction there. I know some brokers allow it. I therefore buy the latest T. Bill in the aftermarket...still easy to do and a good deal!
Thanks for sharing
Hello Jennifer, I have a doubt. I am going to buy some bonds trough Interactive Brokers. I am US non-resident. Is there any US Withholding Tax when maturity? I mean I know notes and bonds, as they are paying every 6 months or so, or even dividends you have a US Withholding Tax of 30% or 15% depending if your country have a treaty with the US. But this T-Bills seems like you buy a stock and sell later, and I know in this case there's no US Withholding Tax.
Thank you in advance
Thanks for the great video! I’m trying to understand how the “interest” works. So you’re not really earning an interest, you’re just getting a discount on the purchase price, right? In your example, you’re getting a discount of $50, and at maturity, you’ll get back the full $10,000. Can we withdraw that $50, or does it just sit there? At maturity, will the total amount then be $10,050? I feel like I may be missing something…
T-Bill Rates, Pricing & Interest | High Rate vs Investment Rate
th-cam.com/video/keerkA4XaIk/w-d-xo.html
Given your example, you would find that $9950 would be debited from your bank account when you purchase $10,000 of T-bills. At maturity, the US treasury will give you back your $9950 + $50 interest, for a total of $10,000.
An earnings video would be nice please. Great job and Thank you
An earnings video on what? Please clarify.
@@DiamondNestEgg Like a specific amount earnings example with T-bills. Ex, a $10,000 T-Bill at this % will earn this much in 1 year.
Maybe you can incorporate it in future videos: which are a great help. Thank you so much. I share your videos to family and friends.
can you recommend a template of program that will track T-Bill that have been purchased?
learning a new super saver trick, not interested in ibonds next year. ok so the interest rates of t bills is a TOTAL of the 'expected' based on that report on the treasury direct website in that time period. The interest rate isnt based on what it would be if it were a whole year, right? Like my high yield savings earns 3% based on a year of time. So this is around 4% but earning that only in a 13 or 17 week time period?
Thanks for your information! You mentioned that T-Bill interest is subject to Federal income tax in USA is based on the assumption that the holder of the T-Bill is US tax resident? If non-US Tax resident, there should be no US interest income tax?
You should check with a tax advisor in your country of residence/ domicile
You mentioned that auctions are occurring every week, when I have looked at Fidelity for the past 2 weeks, the only new issues were for 8 weeks or longer.
I use Schwab but it should be about the same. On the main Schwab fixed income page it shows from 90 days and longer of both bonds and CD's unless you click on the "modify search" button and change the date range.
@@100perdido Fidelity does not have that option. You just click on ‘New Issues’ and you get what you get - minimum of 8 weeks (for now, I guess).
You are probably not looking on the announcement date. Would suggest rewatching this video on how to read the auction schedule (minute 7) & how this applies when you go onto Fidelity to make the purchase (minute 16): th-cam.com/video/rFuiC-UNeMc/w-d-xo.html
For T-Bills how or where do I buy so that there is no taxes payable.? Thanks
You have a lot of good information. But haven't heard this issue dealt with. A question relevant especially for 4 week rates that get calculated. The four weeks seems to be measured from the settlement date which is almost five weeks from the auction date. There is a day or so before that the money needs to be transferred out of a high yield savings and there is a day or so after maturity that the money can be shifted back to a high yield savings account. So, the 4 weeks of T-bill must exceed 5 weeks of high yield interest to make it worth while. Am I looking at this correctly?
Also, it seems this should not be as big an issue if the T-Bills were auto rolled over
Great videos...have passed them along to friends.
You've probably touched on this, but I haven't seen it yet...taxes! Are the proceeds\income from a tax-year of T-bills taxed any special way, or is that 'income' just lumped in with the rest of your federal taxes?
It's taxed as interest income in the year that it's received
@@DiamondNestEgg Ah...right. Kinda obvious now that I think about it. Thank you
On a brokerage account, it lists most treasury bills with 0% coupon, and I can rely on Yield % to determine what my interest earnings will be. There are a few treasury bills with a 2% coupon. What does that mean?
when they expire do they deposit the interest in your bank account too, or do you have to claim it somewhere? I had bought some last month and they expired today. i got my initial purchase amount back but no interest..
Love your videos! So I bought 20 thousand in 13 week bills in the last auction with an interest of 3.2% problem is I can't figure out what my return is can you help me out ? Also I signed up for an auto reinvestment 1 time not sure if was the right thing to do can you give me opinion on that ? Thanks for. All your hard work !
Look at what you paid. As the video explained, the interest is in the form of the discount you get from the face value of the 20K T Bill, which is what the Treasury will pay you back in 13 weeks. So your bank account or if you bought from a broker, your funding account, should have deducted less than $20K. That discount is the interest. The investment rate they quote is theoretical and assumes you reinvest the entire year -in this case,13 weeks X 4-at that same price you paid for that T Bill and includes compounding. But you never know what the price of the bill will be at the next auction in 13 weeks. My sister and I have been watching this channel since February when we bought our first I Bonds and it's very helpful.
@@jamesrobertson504 thank you for the info ! Yes this is a great channel
Thank you guys!
i have 3 month tbills that i reinvest upon maturity to another 3 month tbill. what if i want to roll that over to a 6 month tbill instead at maturity? can i just let the 3 month bill mature and let the proceeds get paid to my bank account, and simultaneously buy the 6 month tbill that is issued at the same date when the 3 month mature at? or is there a risk treasury direct will execute the 6 month purchase first before settling the maturing 3 month bill, hence causing a problem? thanks.
So if I buy through Schwab can I sell them before they mature?
I watch cnbc from time to time. This analyst Rick Santelli delivers a treasury auction report card occasionally. Yesterday he gave it a D- the worst ever. Today November the 10th, he gave it an a, the best ever. Do you know what his criteria would be and is there some way I can use these reports to make decisions about buying treasuries?
Sorry, I don't know what info he takes into consideration in his reporting
I would be interested in how to buy T-Bills on the secondary market.... when I look at it on Fidelity, the minimums are way high and really don't make sense. Like "5,000(100)" -- what does that mean? Can I buy 1 for 5000 dollars?? I don't understand. And the Depth of Book that Fidelity suggested doesn't make much sense to me, and doesn't have a wide variety of lower minimums. I am scratching my head. I did put in an order for a new auction that will be held tomorrow... but I was just wondering about buying on the open market.
How To Buy T-Bills On Fidelity | Treasury Bills 2023 (Secondary Market)
th-cam.com/video/kxxP8iHd7bg/w-d-xo.html
We have ones on the channel for secondary market T-Bill purchases via Schwab & Merrill as well
Can you discuss buying a CD through Fidelity verses a bank. And a CD vrs. a TBill.
thank you.
I have it on my list already - quite a few folks have asked about this.
So for example they’d emailed a 13 week bill at 4% , this means I’ll get 4% of the par value then?
They don't email you anything. You buy it online & it shows up in your account. The 4% is an annualized number.
@@DiamondNestEgg oh I signed up for the email alerts about the bills that say their rate and amount etc. also Ty for clarifying it’s APY. So I’d get a 2 month slice of a 4% APY for the 8 weeks.
Did you make a video comparing T-Bills to Treasury Notes?
Not yet
Thanks for the informative video!
Quick question, when buying the 17-week T-bill on 01/03/2023 on TreasuryDirect, the money isn't deducted from my bank account until the issue date of 01/10/2023. However, when buying on Schwab, it is deducted immediately. Does this mean we are losing a week of interest when buying on Schwab and other brokerages vs. TreasuryDirect?
Thanks in advance!
Assuming you're earning interest from your bank, that is correct in the TD vs Schwab comparison.
Thank you for your video which is super helpful. Then I get confused about the interests that receiving on the maturity . What if I sell my Tbill through the auction before its maturity, then I wouldn't get interests?
When you sell your TD bill before maturity in the secondary market, you get whatever price the secondary market is willing to pay - I talk about this towards the end of the video.
@@DiamondNestEgg thank you so much! So the coupon rate is also part of auction and changeable. (Wow a whole new concept for me)
For portfolio asset allocation should T Bills be considered bonds or cash? Also, where would I Bonds fit in?
On a high-level, T-Bills (even though short-term) and I-Bonds would fall under Bonds
@@DiamondNestEgg Thank you. Your excellent videos have really opened up the possibilities in the fixed income / bond portions of my portfolio.
Jennifer, can you tell me why you prefer new-issue treasuries rather than treasury bills, notes, or bonds on the secondary market?
Hi Carol. I talk about my preference around minute 8. Hope this helps!
Thanks for the great videos! I am considering long-term bond investing. Should I buy a 10-year bond now or wait for a better interest rate? What time do you think is good to "lock" the 10-year bond rate?
I don’t know your individual circumstances so really can’t say which investment options are most suitable for you.
@@DiamondNestEgg, I mean, do you think 10-year bond yield will be ever higher (>4%) in the near future?
@@nelsonjiao1457 Rate increase is predicted in November...might be wise to make decision after the expected rate announcement in Nov.
Do you think yields will be higher or lower 6 months from now? I'm trying to decide whether to buy 26 week or 52 week T Bills.
Gifting i bonds to friend: how are these counted towards gift tax if they are within annual limit, but transferred in future year and not present year?
still confused with when the interest got paid. on one hand, you said the interest payment is at the maturity date. on the other hand, we bought it with discounted price, like $950 for $1000. isn't the difference $50 already the interest payment, which means paid upfront?
I think she means that you bought a bond, for example, with a face value of $1000, for a discounted price of $950. That bond is yours once you buy it, but you can't take the $1000 until the bond matures. At that time, you have $1000. If you sell the bond before it matures, you sell it at the market price.
Thank you
If you could buy a CD for the same time period and return as a t-bill, which would you choose? What if the CD was paying more?
T-Bills offer tax advantages that CDs don't, so you'd need to factor that into the higher CD return
If you buy directly from Tresury Direct, do you have to pay the discounted amount (which is less than the face value)? Now if you decide to roll it over when it matures, how do you buy the T-Bill with odd dollars (in this case the face value) amount? Thanks.
Let's use Fidelity as an example. If I place an initial order for $1,000 of 4-week T-Bills, when this T-Bill matures in 4 weeks & auto-roll happens, I would be purchasing my next $1,000 of 4-week T-Bills with whatever money is in my Fidelity account. It would not be an "odd dollar value".
Love your channel!! I have a brokerage account with Fidelity and was thinking about buying T-Bills in that account. Do you have any thoughts on that? Or should i buy them with my IRA account? Thank you!!
You can buy T-Bills in both types of accounts. Just keep in mind that if you do this via a traditional IRA, when you withdraw, that interest will be taxed as ordinary income
Can you explain the difference between the “interest rate” and “high yield “ columns on the Treasury Direct results and data table of recent auctions? Which value is applied to my T-bill? TY
From the TD Glossary:
Interest Rate: (Notes, Bonds, & TIPS only) The interest rate determines the amount of money that your money earns. Interest rate is a percentage used to figure out how much interest you will get. For example, if you have a $100 Treasury note with an interest rate of 5 percent; at the end of the year, you will get $5.00 (5% of $100) in interest.
Yield: Yield is the annual rate of return on a security.
We'll have to wait until Jennifer or another poster weighs in as to which # number is applicable. Sorry.
To get your annualized yield do this. [(100-price paid)/price paid] × 365/days to maturity at time of purchase
Thanks everyone. I'm assuming you mean the high rate vs investment rate columns. As I understand it, the high rate is what everyone gets at a particular auction & the investment rate is the annualized rate of return based on the bill’s purchase price - what you would use to compare with other investments. I'll most likely need to do a video on this at some point, but if you want a visual example of the latter, check out the section in this other T-Bill video: th-cam.com/video/rFuiC-UNeMc/w-d-xo.html
Is the interested calculated monthly? Eventhpugh its paid at the end?
It's calculated as par value minus your purchase price. I walk through a sample calculation in the video.
Question : I just bought 25k of t bills - my assumption is I will receive 4.5% of that amount in 13 weeks … I think I’m wrong according to this video I will receive 4.5% on amount of par value - purchase price at auction. Could you clarify ?
Rates are quoted on an annualized basis
@@DiamondNestEgg just want to thank you for your videos. Truly helping me educate myself. Thanks for all the clear concise and layman information.
Thank you for you informative video. I was able to actually make my first purchase which matures next week but I don’t see it in my history in my TD AMERITRADE account transactions or history? How do I see if order was placed? I did take a screen shot though.
I'd suggest TDA on this
@@DiamondNestEggdo you mean the app? I have that if so.