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Hello all. I'm looking at purchasing T-bill through Vanguard. This will be my first time buying T-bill. Not sure why I'm nervous about it, maybe it because its a large amount for me. I have 50k to invest in t-bill. When I go into vanguard, I see a 17 week bill with a 4.843 indicative yield, settle on 4/04/2023 mature in 08/2023 There is also a 2 month US treasury bill at 4.224 mature in 05/30/2023. If I were to go with the 17 week, what is the estimated interest I will be getting from the 50k? I was initially going to put money into the high yield saving at 3.75 as well as get a CD but I like that the t-bill is only taxed at the federal level. At any rate, if someone can please advise, I would greatly appreciate it. Thank you. 17 weeks is ...

MisterMister wrote: ↑Tue Mar 28, 2023 4:36 pm ^ Ha. Thanks; what I get for posting when half asleep!

Well, I don't know about where you are, but 6 inches of snow here just a couple days ago makes it seem like it would be about 6 weeks to mid-April.

^ Actually it's only about 2 weeks to maturity for the 4/15/23.

You can find the index ratio at:
http://eyebonds.info/tips/2023/tips2023_04a.html

I see 1.20757 on the day it matures there. Thus for each of those TIPS you will get $1207.57, plus a coupon payment.

St. Louis Fed's "How the Fed Implements Monetary Policy" (in plain English), includes:

Open Market Operations: Maintaining Ample Reserves
Open market operations are the buying and selling of government securities by the Federal Reserve.
https://www.stlouisfed.org/in-plain-eng ... ary-policy

Does this not mean that, in addition to other actions, the Fed would buy and sell T-bills in order to keep the short term interest rate near their target?

The physical branch does grant some additional security. If I received a large check or if I need a cashier check in a hurry. If my account gets frozen, it would be easier to resolve if you have a physical branch. I think the recent hike in interest rate has increased the spread between physical bank and HYSAs. A few years ago the spreads maybe like 0.5%, which is peanuts. Now HYSA yield 4%, while old school banks yield I think the benefits of having a physical bank that one can actually walk into and deal with another human being have been underestimated any more. Also aside from accounts there are still such things as safe deposit boxes, places to unload ten pounds of coins, and places to obtain newish $100 bill if travelling to Argentin...

I keep about $2k as spending buffer at suboptimal rate. My pay checks get deposited there and it immediately get a fixed amount transferred to a high savings account and other investments. The rest get earmark for bills. I find that some older population store money in subpar accounts because they don’t trust banks without a physical branch, but as they age their ability to get around is reduced, restricting the branch they can visit. This can come in a high cost. The storage of money at subpar rates cost my mom about $800 a month in interest. After much argument, I manage to reduce the loss by convincing her to transfer 2/3 to high yield account but she won’t do more even at a loss of profit. The reason is that she feel it is unsafe. My v...

Been literally decades since I balanced a checkbook. The time was mainly wasted as the banks computers were almost always better at simple arithmetic than I was, especially when I made a transcription error. Wasn't that the purpose, to find your errors? I kept a register because of the delay in checks clearing, so this allowed me to see the projected balance. The balancing was to make sure that my figures agreed with the banks and if they didn't, I would then look for and find my errors. When the check register became a spreadsheet, this eliminated one class of errors. The purpose of maintaining it is still to see the projected balance, but instead of uncleared checks it's about bills scheduled to be paid. Not in this case. The transcripti...

dcabler wrote: ↑Tue Mar 28, 2023 5:06 am
Been literally decades since I balanced a checkbook. The time was mainly wasted as the banks computers were almost always better at simple arithmetic than I was, especially when I made a transcription error.

Wasn't that the purpose, to find your errors?

I kept a register because of the delay in checks clearing, so this allowed me to see the projected balance. The balancing was to make sure that my figures agreed with the banks and if they didn't, I would then look for and find my errors.

When the check register became a spreadsheet, this eliminated one class of errors. The purpose of maintaining it is still to see the projected balance, but instead of uncleared checks it's about bills scheduled to be paid.

I use a simple Google Sheets spreadsheet to track tickers, share counts, performance and an approximate total portfolio balance. Updating that spreadsheet regularly (usually semi-monthly, sometimes less often) I will quickly notice any discrepancy. As others have mentioned this is typically due to a distribution, dividend or brokerage expenses. This is enough to allow me to sleep well at night. Similar here, each time I make a transaction I enter the change in shares on the spread sheet when I get the confirmation email, then when the monthly statements are available I check the numbers. The share prices automatically update on this sheet and the spreadsheet shows the total balance as well as the asset allocation. At the end of each month,...

I am talking about pure cash interest in Interactive Brokers.. not what you get in the money market funds. How much interest Vanguard and Fidelity pay on Cash.. without having to roll it into a money market instrument? At Fidelity, they will auto-liquidate any of their MMKT funds to make a transfer. However, any money coming in goes to the 'core sweep' account, so to get it to a MMKT fund, you have to do a buy. Will that morning sell/transfer of a MMKT fund be a today transfer, or would it always be over-night since a sell is involved, I don't know, I've never done one that way. Money coming in will go directly to a money market fund at Fidelity without making a buy order, if you have chosen a money market fund for your "core" po...

TheTimeLord wrote: ↑Sun Mar 26, 2023 11:57 am

jeffyscott wrote: ↑Sun Mar 26, 2023 11:51 am ^But what about those who missed out because all their money was already invested.

Where'd the money to buy the 3 year come from?

In this specific instance, unutilized funds from a matured LMP ladder rung.

Okay, so just reinvesting when the money was available to do so. Did you pass up higher rates for shorter terms when you bought the 3 year?

Why I see the game worth it: $1 million provides $40k a year in spending if using a 4% withdrawal rate. $1 million also can provide at least $2500 bonus every year That $2500 decreases the withdrawal from 4% down to 3.75% which is a really big deal and in my opinion worth even a few hours of my time. Now what if you had, say, $5 million, yet still had no desire to spend more than $40K per year from your portfolio? You are already at less than a 1% withdrawal rate. Is it still worth the effort just to increase the value of your estate? If I had $5 million I would be spending closer to $200k. I know this because as my wealth increases so does my spending. If I could get a bonus of $12,500 for my $5million with little effort I would do it. I ...

^But what about those who missed out because all their money was already invested.

Where'd the money to buy the 3 year come from?

^Yes, I but I am talking about buying/selling securities (not issuing), in order to achieve the target short term rate set by the Fed.

EnjoyIt wrote: ↑Sun Mar 26, 2023 8:38 am Why I see the game worth it:

$1 million provides $40k a year in spending if using a 4% withdrawal rate.

$1 million also can provide at least $2500 bonus every year

That $2500 decreases the withdrawal from 4% down to 3.75% which is a really big deal and in my opinion worth even a few hours of my time.

Now what if you had, say, $5 million, yet still had no desire to spend more than $40K per year from your portfolio?

You are already at less than a 1% withdrawal rate. Is it still worth the effort just to increase the value of your estate?

Interactive Brokers pay 4.33 % for cash . They pay fed funds rate minus 50 basis points and reflect new rate the day after the fed action. No settlement fund or sweeping needed. But need minimum 100k equity in the account and first 10k cash get no interest. This is lower than Vanguard and Fidelity... I am talking about pure cash interest in Interactive Brokers.. not what you get in the money market funds. How much interest Vanguard and Fidelity pay on Cash.. without having to roll it into a money market instrument? At Fidelity, they will auto-liquidate any of their MMKT funds to make a transfer. However, any money coming in goes to the 'core sweep' account, so to get it to a MMKT fund, you have to do a buy. Will that morning sell/transfer ...

Scorpion Stare wrote: ↑Fri Mar 24, 2023 10:30 am Though in the following newsletter he talks more about the specifics of the Credit Suisse case. Rather than Credit Suisse zeroing its AT1s through their built-in triggering mechanism, the AT1s were zeroed by the banking regulator as part of its larger action to save the bank. Bank rescues in general take place in a sort of legal no-man's-land where normal procedures are frequently tossed out the window.

So it seems that even though it may have happened in a different way than specified in the prospectus, etc., the fund managers at PIMCO, etc. that chose to buy these things (and are now suing), knew or should have known that this was a possible outcome.

So the Fed should be selling (more) T-bills in order to try to push the short term rate back up to it's target, right?

tibbitts wrote: ↑Sat Mar 25, 2023 4:03 pm

beernutz wrote: ↑Sat Mar 25, 2023 3:47 pm Pls define sub-optimal thx.

That's a good point.

It's not, since the OP did state under 2% as their criterion/definition.

I've been thinking about just consolidating everything at Fidelity and no longer chasing bonuses/etc. If I'm xferring low 7 figures (across multiple accounts) to Fidelity, does anyone know whether they may provide some un-advertised xfer bonus? I assume I'd need to call them and see, but wanted to check others' experiences first. I only started this bonus chasing last fall. I often ponder if it’s worth vs. the benefits of consolidating, especially to make things smoother for my wife in the event something was to happen to me. But for now, chasing seems to win. If I may ask, what was the main factor for you to want to consolidate? It's a part time job. But pays well. All that matters if your wife needs to step in is what you have currently ...

Checking account balance ranges from maybe about $1-4K during most months. Nothing else is below the OP's criterion of 2% (actually nothing else is under 3% and only about another $2K is under 4%).

miket29 wrote: ↑Sat Mar 25, 2023 2:50 pm

Galen wrote: ↑Sat Mar 25, 2023 12:29 pm Is my money earning me 5.188% from March 2, 2023 till March 31, 2024 ? Or is that 5.188% a red herring

Yes and no. It depends on what you mean by "my money earning me".

The replies pointed out the returns you will get and, as you suspected, the coupon payments do not take part in this calculation.

In colloquial usage earning a rate means your money compounds at that rate.

Only the money that remains invested is expected to earn the rate and compound.

If it were a savings account, any money withdrawn is no longer earning or compounding. The Treasury coupon payments are like a (forced) withdrawal.

I've been thinking about just consolidating everything at Fidelity and no longer chasing bonuses/etc. If I'm xferring low 7 figures (across multiple accounts) to Fidelity, does anyone know whether they may provide some un-advertised xfer bonus? I assume I'd need to call them and see, but wanted to check others' experiences first. I only started this bonus chasing last fall. I often ponder if it’s worth vs. the benefits of consolidating, especially to make things smoother for my wife in the event something was to happen to me. But for now, chasing seems to win. If I may ask, what was the main factor for you to want to consolidate? It's a part time job. But pays well. All that matters if your wife needs to step in is what you have currently ...

anon_investor wrote: ↑Sat Mar 25, 2023 11:36 am I guess it is the settlement account interest. But 0.45% is terrible since you miss out on a week of T-Bill earnings which is currently over 4% annualized. The fact that Schwab lets you do it manually, but their autoroll service doesn't seems just wrong.

Sure, I'd never use it under those conditions.

There's the same sort of issue in reverse with Fidelity, they let you use anticipated proceeds only when using autoroll. But it's much less significant, since you can have a money market for your settlement fund at Fidelity.

Eno Deb wrote: ↑Sat Mar 25, 2023 10:48 am From what I read the main point made by BofA appears to be that large inflows into MMFs have historically signaled drops in the stock market.

Probably because the money was coming from selling stocks. But this time, isn't the money mostly coming from banks (and prime money market funds)?

Fidelity offers true treasury autoroll with no time out of the market. Schwab keeps your money out of the market 1 week and gives no interest. Is it no interest, or whatever paltry amount the settlement account pays? (apparently 0.45%, currently) Conversely, at Schwab you can apparently do a manual roll with no time out of the market: There was an earlier discussion of the mechanics of rolling tbills at Vanguard, including whether the proceeds from maturing bills could be used to settle the next auction, but I'm not seeing the conclusion. https://www.bogleheads.org/forum/viewtopic.php?p=6721037#p6721037 Apologies since I'm probably missing something. There's a 13 week tbill auction every Monday (other than holidays) which settles on Thursd...

Schwab pays better bonuses, they will generally match other brokerage bonuses. If you might buy secondary CDs, it is much easier to compare them at Schwab since they include the effect of the $1 per CD commission in the listed YTM. Fidelity does not, which makes it a pain to attempt to compare new and secondary CDs or even to compare yields on secondaries of different terms. OTOH, Fidelity charges less for quantities less than 10 as Schwab has a $10 minimum commission. The other advantages that I know of would only matter to some mutual fund investors (like me). Schwab makes it easier to use anticipated proceeds from a mutual fund sale to buy something else. With no margin and no cash, I can effectively do same day exchanges (in dollars) by...

NabSh wrote: ↑Sat Mar 25, 2023 8:37 am There have been a couple of blog posts about Bank of America warning that next bubble is in Money Market because of high inflow.

They are probably hoping to scare people into putting money in "to big to fail" B of A at near 0%, instead .

The high inflows are only to treasury money market funds. So it should be a "bubble" in T-bills. After the run on SVB and it's subsequent failure, 1 mo T-bills went from about 4.8% to 4.1% in just 7 business days and are now back up to about 4.3%.

I don't know what happened to the securities held by prime money markets over that time frame, but brokered CD rates have certainly risen quite a bit, while treasury yields have dropped, making for some pretty big spreads.

^They are at least essentially the same thing. As #cruncher put it at the link below:

"There is a slight difference in the meaning of yield for a Treasury note and the Annual Percentage Yield (APY) of a CD. But it's not enough of a difference to worry about."

viewtopic.php?p=6890787#p6890787

The guaranteed reinvestment rate does eliminate that risk, but that's a different issue from the yield.

^Why would you need a calculator? I'd just compare the YTMs to the APY for the bank CD.

Treasury coupons (if any) are paid in cash, just like brokered CDs.

For a treasury that has been sold, am I correct in assuming that the YTM shown on the confirmation is based on the price (and accrued interest) that I got? Meaning that had I kept the treasury, the YTM shown is the yield I would have earned for the remaining term, assuming the current value was what it sold for. The YTM probably is simply calculated from the price. You received the bid price. Whether or not the indicated YTM is what you would have earned depends on what price you want to base you yield calculation on. If you want to use the bid price, then yes, but that's not what you'd pay if you bought the Treasury--you'd pay the ask price. You might want to calculate the yield based on the midpoint between the ask and bid, assuming that...

Bottom Line: Buying a new bill to replace a maturing bill before the maturity date worked...at Vanguard. Again nothing showed up until the day after the maturity date. I tested the same deal with Fidelity. I couldn't make it work. Fidelity wouldn't budge until the funds were in my settlement account. It appears that works at Schwab also, based on #cruncher's post here: https://www.bogleheads.org/forum/viewtopic.php?p=6983276#p6983276 ...I haven't tested a manual rollover at Schwab with funds from a T-bill that hasn't matured by the auction date. I'll be interested to hear how it goes. Manual rollover at Schwab worked for me with no days uninvested. I had an 8-week bill maturing 11/29/2022. I was able to buy a new 8-week at the 11/23/2022 a...

For a treasury that has been sold, am I correct in assuming that the YTM shown on the confirmation is based on the price (and accrued interest) that I got? Meaning that had I kept the treasury, the YTM shown is the yield I would have earned for the remaining term, assuming the current value was what it sold for.

Good analysis jeffyscott -- Is the CD you bought Brokered or Retail...? I like the EWP feature of Retail, but Brokered appear to have higher yields at the moment..., Is liquidity an issue with brokered CD's....? (I'm still a brokered-virgin) Do you (or anyone else), have any experience trying to sell brokered CD's in a bad market like 2008....? Brokered CD and yes, they are not very liquid. I have never sold one and don't plan to. Having now sold a couple treasuries, I can see that one kind of hidden advantage to consider, if buying when spreads vs. CDs are small, is that they are easy to sell if the spread vs. CDs later widens. It's pretty cheap and easy to move from a treasury to a CD, but not the reverse. EWP feature is nice, but shippi...

Good analysis jeffyscott -- Is the CD you bought Brokered or Retail...? I like the EWP feature of Retail, but Brokered appear to have higher yields at the moment..., Is liquidity an issue with brokered CD's....? (I'm still a brokered-virgin) Do you (or anyone else), have any experience trying to sell brokered CD's in a bad market like 2008....? Brokered CD and yes, they are not very liquid. I have never sold one and don't plan to. Having now sold a couple treasuries, I can see that one kind of hidden advantage to consider, if buying when spreads vs. CDs are small, is that they are easy to sell if the spread vs. CDs later widens. It's pretty cheap and easy to move from a treasury to a CD, but not the reverse. EWP feature is nice, but shippi...

^ Well, I was only commenting on what I think is something like 3-3.5% inflation required to break-even with TIPS vs. CDs (in an IRA account), given that the market appears to be forecasting something close to 2%, based on treasuries/TIPS. TIPS over treasuries would be an easy choice for me, but not so much vs. CDs Well, if the Fed got inflation down to 3% within a year, and assuming it was a steady, linear decline, that would still mean an average inflation of approx. 3.9% over the course of the year on your investment. 3.9% plus 1.6% YTM= 5.5%, correct? And the inflation protection has to be worth something to you. Even if the market gets it right (which is a big "if") and they do get inflation down to 2% (or lower), you would ...

^ Well, I was only commenting on what I think is something like 3-3.5% inflation required to break-even with TIPS vs. CDs (in an IRA account), given that the market appears to be forecasting something close to 2%, based on treasuries/TIPS. TIPS over treasuries would be an easy choice for me, but not so much vs. CDs

Does Schwab allow you to enter the auction purchase order in those circumstances, no cash and no margin, but with a maturing Treasury?

If they do, then I would guess that it should be okay. I think a test of that was reported on here:
viewtopic.php?p=6983276#p6983276

Anyone migrating back towards Brokerage CDs from Treasuries now that they seem to offer better rates across the spectrum? I'd put just a little in CDs recently, taking funds from short term bond index fund and money market. This question made me think about taking the plunge and actually selling treasuries to buy CDs, I have never sold any before (never have sold anything other than mutual funds before). I sold a treasury with about a year to maturity that would have earned about 4.7% and bought a CD earning 5.35%. I also extended maturity by about 6 months, though I could've gotten the same CD rate at 1 year. I got $9582 for the treasury that would have been worth $10K at maturity 3/15/24, plus two more coupons at 0.25%. So would have had...

Anyone migrating back towards Brokerage CDs from Treasuries now that they seem to offer better rates across the spectrum? I'd put just a little in CDs recently, taking funds from short term bond index fund and money market. This question made me think about taking the plunge and actually selling treasuries to buy CDs, I have never sold any before (never have sold anything other than mutual funds before). I sold a treasury with about a year to maturity that would have earned about 4.7% and bought a CD earning 5.35%. I also extended maturity by about 6 months, though I could've gotten the same CD rate at 1 year. I got $9582 for the treasury that would have been worth $10K at maturity 3/15/24, plus two more coupons at 0.25%. So would have had...

Anyone migrating back towards Brokerage CDs from Treasuries now that they seem to offer better rates across the spectrum? Thanks! I didn't realize this. When I consider that there are no state taxes on the treasuries, the shorter bills pan out about the same as CDs. The 3 year CDs are paying 1% more which beats the 3 year treasurys even when considering state taxes. Everyone already knows to watch out for callable CD offerings. I’m seeing Schwab at around 5.3% for a year. But based on my past experience, it’s much harder to sell a CD before maturity. I’m not sure I want to give up liquidity for slightly better yields. I’m planning to buy 3 month t bills next week. Yes, CDs are not things you want to try to sell. Testing the liquidity of th...

Anyone migrating back towards Brokerage CDs from Treasuries now that they seem to offer better rates across the spectrum? I'd put just a little in CDs recently, taking funds from short term bond index fund and money market. This question made me think about taking the plunge and actually selling treasuries to buy CDs, I have never sold any before (never have sold anything other than mutual funds before). I sold a treasury with about a year to maturity that would have earned about 4.7% and bought a CD earning 5.35%. I also extended maturity by about 6 months, though I could've gotten the same CD rate at 1 year. I got $9582 for the treasury that would have been worth $10K at maturity 3/15/24, plus two more coupons at 0.25%. So would have had...

It appears this is something new for VUSXX, since last year it reported 100% of income was from US government obligations. I just found a great data tool for MMF Repo statistics. From the Office of Financial Research: https://www.financialresearch.gov/money-market-funds/us-mmfs-repos-with-the-federal-reserve/ this can drill down and show participation levels in the various Repo markets to various levels of detail. It is clear from looking at Vanguard Fund level data on the US Treasury Repo market that VUSXX only started in this market in a significant way in the past 90 days. BTW, this data appears to be an aggregation of the monthly fund reports to EDGAR. Took a while to figure it out, but got there eventually. They show 0 going all the w...

Booogle wrote: ↑Wed Mar 22, 2023 6:27 am

Wiggums wrote: ↑Wed Mar 22, 2023 6:26 am VUSXX is the safest because of its pure T-Bills composition and state and local tax exempt.

VMFXX is second safest, but the composition is not a pure US treasury play.

This article disagrees with that:

https://www.fitchratings.com/research/f ... 22-02-2023

Perhaps this is why VUSXX now has 24% in repurchase agreements?

It appears this is something new for VUSXX, since last year it reported 100% of income was from US government obligations.

I think the history is that vmrxx was a prime money market and a couple years ago vanguard decided to no longer offer a prime money market and converted it to a federal money market. For whatever reason they didn't merge the prime money market into the existing VMFXX.

I think at the same time they also merged investor and admiral share classes of money market funds.

busdriver11 wrote: ↑Sun Mar 19, 2023 10:08 pm But I think if I present the risk of having over 250K there, she may be less comfortable, and be willing to change something.

Maybe present the cost of this as well . For example having $250K earning 2%, when it could be safely earning 4.5-5% in T-bills or a treasury money market fund is costing her 2.5-3% per year. That comes to $6000-$7500 per year or maybe call it $500-$600 per month. So effectively as if the $250K bank account has a $500-600 monthly fee.

Fidelity has a good auto roll system for T-bills. Vanguard has the best (cheapest) treasury money market fund. And I would say that Schwab has the best fraud protection, at least it seemed so 5 years ago based on this:
viewtopic.php?t=257429

Why do you think that is safer? I would start first by checking the “shadow NAV” of each fund. Not just me look at the outflows/inflows for these two funds today -3.3B and +2B so maybe lot more people think SNSXX is safer and I dont know what is shadow NAV :) I am guessing shadow NAV is the same as market NAV. It was $1.0001 on 3/16. Well, no. The NAV was $1.0000. That is the point. You always buy and sell at $1.0000 even when the Net Asset Value is not $1.0000. On this case it looks like the fund is slightly overfunded, which is a good sign. Schwab lists a "Market-Based NAV" of $1.0001 https://www.schwabassetmanagement.com/products/swvxx Presumably this is what the true NAV would be, if it weren't artificially held to $1. Is thi...

imbogled wrote: ↑Sun Mar 19, 2023 8:47 am

jeffyscott wrote: ↑Sun Mar 19, 2023 8:02 am I think you can find that here: http://eyebonds.info/tips/hist/tips47hista.html

If I understand correctly, that is showing a YTM of 1.96% if you bought at the first issue date and held to maturity. That would account the purchase price of $1,075.06, all coupon payments, and the value at maturity of $1,290.50.

Thanks to all for quick and helpful replies. So, for $100,000 is it as simple as multiplying 100?

I understand that things will be different for the future. I was just wondering in general how that particular time period panned out.

Multiplying by $100, would make initial principal invested about $107,500.

They auctioned at a premium to the $1000 face value. That's why real yield was negative.

Of course it would not be a bill, but there could be a coupon paying note or bond with ~1 year remaining to maturity.

Notes and bonds pay interest every 6 months, so if there were one selling for $950 with a 0.5% coupon, you would get coupon payment(s) of $2.50 and the $1000 face value (along with the final coupon payment) at maturity.

I think you can find that here: http://eyebonds.info/tips/hist/tips47hista.html

If I understand correctly, that is showing a YTM of 1.96% if you bought at the first issue date and held to maturity. That would account the purchase price of $1,075.06, all coupon payments, and the value at maturity of $1,290.50.