My thanks too.
My answer to all this is to upload the broker's 1099's to Turbo Tax and send the IRS the return directly from TT.
I would assume that the tax treatment is the same if you sell before maturity.
Last year?retiringwhen wrote: ↑Sat Mar 18, 2023 1:47 pm I will share my simulated auto-roll and ladders for the last year soon.
Electron wrote: ↑Sat Mar 18, 2023 1:05 pm I created a model in Excel that calculates the average T-Bill yield over the term of each ladder using the daily Treasury Par Yield Curve Data.
The return of a typical T-Bill ladder investing at less frequent intervals might differ from the model by a small amount.
retiringwhen wrote: ↑Sat Mar 18, 2023 1:16 pm I would be interested in your source data, but I am also confused, what is a 1 month ladder? How many tranches do you have in the ladder? 4 tranches with one every week? Similar patterns for the other ones?
1) The interest on the T-bill is not subject to state income tax.
The bond with a 6.25% coupon may be the problem. Are there adverse tax consequences for this issue that adjoining issues don't have?Kevin M wrote: ↑Tue Mar 14, 2023 1:23 pmI can tell you the characteristics of the Treasuries with the low yields. Maturity date for all is 8/15/2023.
912833LM0, stripped interest STRIPS, 4.15%
912803BC6, stripped principal STRIPS, 3.96%
912810EQ7, bond, 6.25% cpn, 3.91%
If they were a new issue we would have two Treasury Bills with different cusips maturing on the same day.
I have a very vague remembrance that the other sides of the bid/ask at Schwab were from Schwab itself. The idea was to give the small investors a break.
OK (maybe). So notes are a little more of a PITA than bills because you have to deal with the coupons and people are demanding a slightly higher yield to compensate.Kevin M wrote: ↑Sun Feb 19, 2023 11:20 am I'll use the quotes from yesterday to examine this.
The 9/30/23 note ask yield was 5.04% when I pulled the quotes. The closest maturity bills are a 9/7/23 at 4.82 and a 10/5/23 at 4.90%. The latter is closer to 9/30/23, so I'll compare with that. The yield diff is 14 basis points. The bid yield for the note was 5.10%, so a b/a yields spread of 6 basis points, and only half of that should be attributed to the purchase, so 3 basis points.
What's your reasoning for buying any notes with maturities less than 52 weeks at all? Why not buy T-Bills on secondary and avoid the coupon reinvestment and bookkeeping issues?Kevin M wrote: ↑Fri Feb 17, 2023 5:36 pm
Today I bought 50 of 91282CDA6, which is a Treasury note that matures 9/30/23, at a yield of 5.06%. As usual, I ignored coupon and accrued interest, and bought the Treasury with the highest yield at the approximately 7-month maturity that I was going for.
Earlier in the week I did several purchases of at about 6 months maturity. One lot was for a bill that matures '''
I think you are comparing the price of 1 vs the price of 100 but only buying one.So if I read this correctly, you pay 39 cents more per $1000 spent at Fidelity vs Schwab, translating into a yield difference of 0.044% (or 44 cents annually per thousand dollars invested) , am I correct?
Yep. In some cases you have to carry them over to future years. And that carry over period expires and the credit may disappear forever.OverseasBH wrote: ↑Sun Jan 22, 2023 8:34 am The trouble with international equity funds is that you may not be able to take all of the foreign tax credit due despite 100% of the foreign taxes paid being added to your US income.
1/16/23 10:01 Easterntypical.investor wrote: ↑Sun Jan 15, 2023 11:17 pm They are still working on it I think.
If it were "better" then all the pro's would be doing it and the "better" would go away.
I have been using a rolling T-bill "wiggly" ladder for some six months and am curious if too much work will come back to haunt us at tax time. Do the brokers report the payment as interest plus Return of Capital or do we have to break down the $100's into parts ourselves for our tax return?
Duh. I was looking at T-Bills.Kevin M wrote: ↑Thu Dec 15, 2022 12:07 pmThere are 50 TIPS outstanding, not 12.Doc wrote: ↑Thu Dec 15, 2022 11:57 amI just checked at Vanguard and the minimum changes with the issue. There were a few with minimum of one but not all.
Schwab shows all 12. Fidelity also I think. (Not as easy to count as Schwab.)
I just checked at Vanguard and the minimum changes with the issue. There were a few with minimum of one but not all.
Because the rep at a trading desk told me so. He could place the trade manually.Elmo wrote: ↑Thu Dec 08, 2022 3:30 pmI am at Fidelity - forgot to say that.Doc wrote: ↑Thu Dec 08, 2022 3:21 pmOr whether it is a margin account.
Even in a cash account there are work arounds. Like placing the trade the day prior to the auction by calling the trade desk after the close of the business day.
Different options are available depending on the broker. Some of these options may be "tricks".
How would calling the trading desk help? Can you explain please?
Or whether it is a margin account.
I think they roll on the NEW issue date. Every 3 months.That makes no sense, since the reopenings are for the same security that was most recently issued as a 10-year:
Kevin, I'm confused.Kevin M wrote: ↑Sat Dec 03, 2022 1:17 pm I see nothing horribly wrong with either of these approaches if one wants to maintain about a constant 10-year maturity for some reason, although there would be slightly less trading costs with a rolling ladder, in which proceeds from a maturing bond (no trading costs) are used to buy the long rung in the ladder at auction (no trading costs
I also like international small cap but for another reason.Random Walker wrote: ↑Fri Nov 25, 2022 7:27 am I like international small cap value. Get factor diversification and perhaps better diversification than large since smaller companies more affected by local economies.
No gap if you are placing the buy yourself.
The highest T-bill rates were 26 or 52 weeks at the latest auction(s):AndyAndTheTuna wrote: ↑Mon Nov 21, 2022 11:43 am What is everyone's general strategy for taking advantage of the rising rate environment? I have a chunk of short term cash that I can lock up until January 2024; I'd like to capture interest to reinvest in a 529. I'm thinking of rolling 8 week treasuries to capture rising rates; it seems to be one of the steeper points on the yield curve.
Should I go longer, shorter, etc? Hard to say without a crystal ball, I know, but 8 weeks feels right.
It may also depend on your broker. My experience has been that if a sell trade is made prior to the buy order being placed then the buy is OK even if the sell trade settles at a later date.MisterMister wrote: ↑Mon Nov 14, 2022 8:19 am I think this depends on whether you have a margin account. Without a margin account, the timing delay is a quirk that is handled for you automatically in the case of autoroll. But my experience is that, without a margin account, you cannot make a manual purchase without cash being available at the time of the purchase (not the time of settlement of the new purchase
Been there, done that, still do it.KlangFool wrote: ↑Fri Nov 11, 2022 9:28 pm OP,
I keep 10% in SmallCapValue and 10% in Intermediate Term Treasury as part of my mini-Larry portfolio. It is part of the Barbell Investment Strategy. It works very well with rebalancing in a volatile market.
https://www.investopedia.com/articles/i ... rategy.asp
Don't try this unless you believe in it. And, you can rebalance and maintain the AA in a volatile market.
Not only do the rates adjust quite quickly but they also adjust prior to the FED release because the bond traders build their expectation into the rate. So yo don't usually see any significant jumps in rates after the FD release.jebmke wrote: ↑Thu Nov 03, 2022 11:43 am Treasury market is huge and very liquid. Prices adjust quite quickly to what investors expect going forward. Unless the FED releases new information after the hike, it should be fully priced in quite quickly. Keep in mind that the FED overnight rate isn't the only thing that is considered by bond investors.
Been there. Did that. Still doing it.user9532 wrote: ↑Mon Oct 24, 2022 9:00 pm I’m thinking of splitting it into six equal parts and investing in six 6-month T-bills maturing every month and roll it. To start, initially I will buy 1-month, 2-month, 3-month, 4-month, 5-month, and 6-month T-bills. When they mature I will reinvest each in 6-month T-bill. Does this make sense or is there a better way?
So if interest rates drop and you sell your T-Bill before maturity it is interest not cap gains. Hmmnn.vineviz wrote: ↑Sat Oct 22, 2022 10:38 am
The tax treatment of Treasury bills is not affected by how they are bought (i.e. at auction or on the secondary market) and how they are dispensed with (i.e. sold or redeemed). The difference between the purchase price and the dispensation price is treated as interest income in all cases.
Just be aware that not every security on the secondary market with a maturity date of <1 year is actually a Treasury bill. Some of them are notes or bonds that are simply nearing maturity, and their tax treatment can be different from the treatment of Treasury bills.
Other in the fact that my TIPS ladder was liquidated in the 2008 TIPS crash to rebalance into equites I have a very similar position.