6 Month Treasuries for Holding Some of Our Savings?

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ruanddu
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6 Month Treasuries for Holding Some of Our Savings?

Post by ruanddu »

Hello,

I have maxed out our I Bonds contributions for my wife and I this year and bought the 10k gifts for each other for next year. This is largely going to be used to store our savings and emergency fund.

Instead of keeping our other relatively large chunk of savings in a low yield bank savings account, does it make sense to buy some 6 month treasuries right now as also part of our savings / emergency fund along with the I Bonds? Seems with the relatively high rate on the 6 month treasuries now it makes sense to me but maybe there are better options I don’t know about (CDs, etc).

If so, is the best way to buy the 6 month treasuries directly on TreasuryDirect website?

Thanks for beating with me. Haven’t bought treasuries before other than I Bonds.

Thank you.
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dual
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by dual »

Instead of treasury direct, a better idea is to buy them at auction in an account with a broker like Fidelity. There is no charge and, after you buy them, you can then sell them easily on the secondary market if you need cash. There is a six Month T-bill auction every week.
Edit. The Six months t-bill is yielding 2.81% as of the date of this response.
https://www.bloomberg.com/markets/rate ... -bonds/us
Last edited by dual on Sun Jul 31, 2022 9:13 pm, edited 1 time in total.
ChiKid24
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by ChiKid24 »

Perfectly fine place but I would avoid buying on TD. I do my purchases at Fidelity as you can buy/sell in secondary market. Provides you with liquidity in case you need the funds before 6 months. Other large brokerages (like Schwab) offer this too. Treasury Direct does not.
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ruanddu
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by ruanddu »

Thank you.

I imagine Vanguard also has the same abilities as Fidelity to buy 6 month treasuries? Any advantages to either?
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BL
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by BL »

I have been buying some at Vanguard. There are one or more long threads here you can search for treasuries. Kevin has been sharing what he has learned.

I started with several 1 units ($1,000) so I got a little practice before I started with larger units. 1,000 units would be $1,000,000, AFAIK, so clear up any confusion first. I had Vanguard pull from my bank to put into the federal money market that comes with each account, which I had never used before. Then any order of treasuries or CDs can be filled by money in the MM. When they mature, the cash goes right back into the MM, now yielding 1.84%. (Some brokerages let you set up repeat purchases as each matures, but not V., AFAIK.)

I buy either treasury bills/bonds or CDs from banks at Vanguard. The 7-9 month bills and CDs are fairly close in yields. For shorter time frame, treasury wins. For longer, CDs pay more. There is no state tax on treasuries.

You can buy new or what someone wants to sell that they bought previously (they don't take any orders for those when V is not open for business.) The auction needs to be ordered before the opening of the auction. We just go along for the ride, not bidding. There is some estimated yield given.

I have not had troubles at treasury direct, but have read too many lockout stories here that I don't want to use it for treasuries when I have a source at brokerages.
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ruanddu
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by ruanddu »

BL wrote: Sun Jul 31, 2022 10:14 pm I have been buying some at Vanguard. There are one or more long threads here you can search for treasuries. Kevin has been sharing what he has learned.

I started with several 1 units ($1,000) so I got a little practice before I started with larger units. 1,000 units would be $1,000,000, AFAIK, so clear up any confusion first. I had Vanguard pull from my bank to put into the federal money market that comes with each account, which I had never used before. Then any order of treasuries or CDs can be filled by money in the MM. When they mature, the cash goes right back into the MM, now yielding 1.84%. (Some brokerages let you set up repeat purchases as each matures, but not V., AFAIK.)

I buy either treasury bills/bonds or CDs from banks at Vanguard. The 7-9 month bills and CDs are fairly close in yields. For shorter time frame, treasury wins. For longer, CDs pay more. There is no state tax on treasuries.

You can buy new or what someone wants to sell that they bought previously (they don't take any orders for those when V is not open for business.) The auction needs to be ordered before the opening of the auction. We just go along for the ride, not bidding. There is some estimated yield given.

I have not had troubles at treasury direct, but have read too many lockout stories here that I don't want to use it for treasuries when I have a source at brokerages.
Very helpful info, thank you. I need to think through the CD versus treasury for shorter and longer term.
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cockersx3
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by cockersx3 »

ruanddu wrote: Sun Jul 31, 2022 10:53 pm
BL wrote: Sun Jul 31, 2022 10:14 pm I have been buying some at Vanguard. There are one or more long threads here you can search for treasuries. Kevin has been sharing what he has learned.

I started with several 1 units ($1,000) so I got a little practice before I started with larger units. 1,000 units would be $1,000,000, AFAIK, so clear up any confusion first. I had Vanguard pull from my bank to put into the federal money market that comes with each account, which I had never used before. Then any order of treasuries or CDs can be filled by money in the MM. When they mature, the cash goes right back into the MM, now yielding 1.84%. (Some brokerages let you set up repeat purchases as each matures, but not V., AFAIK.)

I buy either treasury bills/bonds or CDs from banks at Vanguard. The 7-9 month bills and CDs are fairly close in yields. For shorter time frame, treasury wins. For longer, CDs pay more. There is no state tax on treasuries.

You can buy new or what someone wants to sell that they bought previously (they don't take any orders for those when V is not open for business.) The auction needs to be ordered before the opening of the auction. We just go along for the ride, not bidding. There is some estimated yield given.

I have not had troubles at treasury direct, but have read too many lockout stories here that I don't want to use it for treasuries when I have a source at brokerages.
Very helpful info, thank you. I need to think through the CD versus treasury for shorter and longer term.
One more thing - remember that the interest on treasury bonds / bills held to maturity is only subject to federal taxes, not state taxes. For those of us in high-tax states this is a nice perk.

I'm doing this now - I keep some money in savings for liquidity, but for other savings for which I don't need to maintain the liquidity I'm just purchasing 6M T-bills via Fidelity. It's quite easy, just put your order in on a Thursday or Friday to get them as part of the auction. Fidelity also has an "auto roll" feature that will renew the T-bills when they mature, which is nice.
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by radiowave »

Note, Fidelity also has an auto rollover feature that rolls over each treasury into the same at maturity: https://www.fidelity.com/fixed-income-b ... -program
Bogleheads Wiki: https://www.bogleheads.org/wiki/Main_Page
Atgard
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by Atgard »

Yes it definitely makes sense. One option is to keep a ladder of liquidity: enough for a few month's of expenses/emergency in something liquid (the Vanguard money market funds are now paying like 1.85% or so), then some 3, 6, 12, 24, etc. month treasuries (or non-callable brokered CDs if the rate is higher). This ensures you have enough ready cash to meet expenses/emergencies, with something liquid coming up every few months (that can be re-invested).

Right now the rates on all durations are pretty flat, so not too much of a benefit going out longer unless you want to "lock in" that rate for a longer time. On the longer end, CD yields seem to beat Treasuries a bit. In my experience, it is easy buying & holding both at Vanguard so I buy whichever has the higher yield (noting state taxes if you have any).
LeftCoastIV
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by LeftCoastIV »

We have been buying 6 month treasuries at Vanguard. The auctions are frequent enough and we buy at the non-competitive auction price.

Looks like the most recent auction had a 2.88% yield. ($98.56 price = 1.44% yield for 6 months, so 2.88% annual yield)

Lack of auto rollover at Vanguard is a bummer though, although if the proceeds go into the settlement fund it’s not that big a deal.
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ruanddu
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by ruanddu »

Thanks everyone! You are so generous with your time and knowledge. Much appreciated.
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by Mel Lindauer »

If you have an account at Vanguard, you can buy at an auction or in the secondary market very easily. And, if you have a Fidelity account, you can do the same there.
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CenTexan
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by CenTexan »

I just had a Treasury mature at Vanguard and received no email/notice about it from Vanguard - not for approaching maturity, maturing, nor depositing to my Fed MM account.

Suggest you put the maturity dates on your calendar as you buy them - unless you swim in the vault on a regular basis.
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by mervinj7 »

ruanddu wrote: Sun Jul 31, 2022 9:27 pm Thank you.

I imagine Vanguard also has the same abilities as Fidelity to buy 6 month treasuries? Any advantages to either?
Fidelity has the advantage that you can auto roll the Treasury bill. That is, when your six month bill matures, it will automatically buy another six month bill.
Topic Author
ruanddu
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by ruanddu »

Thanks for the additional updates, everyone.
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by LeftCoastIV »

CenTexan wrote: Mon Aug 01, 2022 3:14 pm I just had a Treasury mature at Vanguard and received no email/notice about it from Vanguard - not for approaching maturity, maturing, nor depositing to my Fed MM account.

Suggest you put the maturity dates on your calendar as you buy them - unless you swim in the vault on a regular basis.
I would have at least thought you would get a transaction confirmation that you bought the settlement fund. Perhaps it takes a couple days?
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by BL »

I don't think of maturity as a transaction, so wouldn't expect a notification (not sure what actually happens.)

A calendar notation or recording the date somewhere sounds like a good thing to keep track of maturity dates. I do have hand-written notes at present, but haven't come up with a permanent location yet, since I am just finishing up on my purchases this week. Some are quite short-term so will have this issue early.
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by MikeG62 »

ruanddu wrote: Sun Jul 31, 2022 8:58 pm Hello,

I have maxed out our I Bonds contributions for my wife and I this year and bought the 10k gifts for each other for next year. This is largely going to be used to store our savings and emergency fund.

Instead of keeping our other relatively large chunk of savings in a low yield bank savings account, does it make sense to buy some 6 month treasuries right now as also part of our savings / emergency fund along with the I Bonds? Seems with the relatively high rate on the 6 month treasuries now it makes sense to me but maybe there are better options I don’t know about (CDs, etc).

I would consider buying another year of I Bonds in your gift boxes (for 2024 delivery) before buying Treasuries. Delivery would be only 16 months away (and as you know you can't sell them for the first 12 months anyway).

As you know, you will earn 9.6% for the first six months. Then you'll get the Nov 1 rate reset for the next 6 months (which I think will be quite attractive). [Note that If the CPI remains flat from June through Sept (unlikely) the reset rate will be over 6.0%. That is not likely to happen, so figure you'll likely earn something like 7.5%+/- for the second six months or ~8.5% for the first 12 months.] Then hold for an additional 4 months and you'll be at January 2024 and could sell them should you choose to do so while not impairing any of the first 12 months interest. Or buy them in mid to late Oct, when you will know for sure what the second 6 month rate reset will be. Your holding period will be even shorter in that case (only about 14 months).

FWIW, my wife and I bought gift bonds for each other for 2023 and 2024 delivery back in April of this year. We intend to purchase another $10,000 for each other in late Oct for delivery in 2025 (~26 month holding period). The way I look at it is even if the Fed is successful in getting inflation to their 2.0% target by May 2023 (the first 2023 reset), I believe we will earn an approximate 5.0% annualized compounded yield for the ~26 month holding period (8.5% for the first 12 months, 2.0% for the second 12 months and 0% for the last three months). Can't touch that in any risk free investment I know of.
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by anon_investor »

ruanddu wrote: Sun Jul 31, 2022 8:58 pm Hello,

I have maxed out our I Bonds contributions for my wife and I this year and bought the 10k gifts for each other for next year. This is largely going to be used to store our savings and emergency fund.

Instead of keeping our other relatively large chunk of savings in a low yield bank savings account, does it make sense to buy some 6 month treasuries right now as also part of our savings / emergency fund along with the I Bonds? Seems with the relatively high rate on the 6 month treasuries now it makes sense to me but maybe there are better options I don’t know about (CDs, etc).

If so, is the best way to buy the 6 month treasuries directly on TreasuryDirect website?

Thanks for beating with me. Haven’t bought treasuries before other than I Bonds.

Thank you.
I have never purchased T-Bills before, but I wanted to understand how it works. So today I place an order for new issue 1 month T-Bills at Fidelity and Vanguard. I turned on autoroll at Fidelity. It was pretty straight forward. When the T-Bills mature in early September, I will get to see how it works at Vanguard where there is no autoroll and at Fidelity with autoroll enabled. It may be worth just buying $1k worth of 1 month T-Bills at your broker just to understand how it works.
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ruanddu
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by ruanddu »

MikeG62 wrote: Tue Aug 02, 2022 3:36 pm
ruanddu wrote: Sun Jul 31, 2022 8:58 pm Hello,

I have maxed out our I Bonds contributions for my wife and I this year and bought the 10k gifts for each other for next year. This is largely going to be used to store our savings and emergency fund.

Instead of keeping our other relatively large chunk of savings in a low yield bank savings account, does it make sense to buy some 6 month treasuries right now as also part of our savings / emergency fund along with the I Bonds? Seems with the relatively high rate on the 6 month treasuries now it makes sense to me but maybe there are better options I don’t know about (CDs, etc).

I would consider buying another year of I Bonds in your gift boxes (for 2024 delivery) before buying Treasuries. Delivery would be only 16 months away (and as you know you can't sell them for the first 12 months anyway).

As you know, you will earn 9.6% for the first six months. Then you'll get the Nov 1 rate reset for the next 6 months (which I think will be quite attractive). [Note that If the CPI remains flat from June through Sept (unlikely) the reset rate will be over 6.0%. That is not likely to happen, so figure you'll likely earn something like 7.5%+/- for the second six months or ~8.5% for the first 12 months.] Then hold for an additional 4 months and you'll be at January 2024 and could sell them should you choose to do so while not impairing any of the first 12 months interest. Or buy them in mid to late Oct, when you will know for sure what the second 6 month rate reset will be. Your holding period will be even shorter in that case (only about 14 months).

FWIW, my wife and I bought gift bonds for each other for 2023 and 2024 delivery back in April of this year. We intend to purchase another $10,000 for each other in late Oct for delivery in 2025 (~26 month holding period). The way I look at it is even if the Fed is successful in getting inflation to their 2.0% target by May 2023 (the first 2023 reset), I believe we will earn an approximate 5.0% annualized compounded yield for the ~26 month holding period (8.5% for the first 12 months, 2.0% for the second 12 months and 0% for the last three months). Can't touch that in any risk free investment I know of.
Good suggestion, thanks! To clarify, even though gifts aren’t delivered till 2024 for instance, they still collect all the interest from now until then, correct? Thanks again.
valleyrock
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by valleyrock »

anon_investor wrote: Tue Aug 02, 2022 3:42 pm
ruanddu wrote: Sun Jul 31, 2022 8:58 pm Hello,

I have maxed out our I Bonds contributions for my wife and I this year and bought the 10k gifts for each other for next year. This is largely going to be used to store our savings and emergency fund.

Instead of keeping our other relatively large chunk of savings in a low yield bank savings account, does it make sense to buy some 6 month treasuries right now as also part of our savings / emergency fund along with the I Bonds? Seems with the relatively high rate on the 6 month treasuries now it makes sense to me but maybe there are better options I don’t know about (CDs, etc).

If so, is the best way to buy the 6 month treasuries directly on TreasuryDirect website?

Thanks for beating with me. Haven’t bought treasuries before other than I Bonds.

Thank you.
I have never purchased T-Bills before, but I wanted to understand how it works. So today I place an order for new issue 1 month T-Bills at Fidelity and Vanguard. I turned on autoroll at Fidelity. It was pretty straight forward. When the T-Bills mature in early September, I will get to see how it works at Vanguard where there is no autoroll and at Fidelity with autoroll enabled. It may be worth just buying $1k worth of 1 month T-Bills at your broker just to understand how it works.
This is a good point. I may just try this at Schwab, although I'm not sure they have auto roll. Never bought T-bills before either.
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anon_investor
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by anon_investor »

valleyrock wrote: Wed Aug 03, 2022 4:16 pm
anon_investor wrote: Tue Aug 02, 2022 3:42 pm
ruanddu wrote: Sun Jul 31, 2022 8:58 pm Hello,

I have maxed out our I Bonds contributions for my wife and I this year and bought the 10k gifts for each other for next year. This is largely going to be used to store our savings and emergency fund.

Instead of keeping our other relatively large chunk of savings in a low yield bank savings account, does it make sense to buy some 6 month treasuries right now as also part of our savings / emergency fund along with the I Bonds? Seems with the relatively high rate on the 6 month treasuries now it makes sense to me but maybe there are better options I don’t know about (CDs, etc).

If so, is the best way to buy the 6 month treasuries directly on TreasuryDirect website?

Thanks for beating with me. Haven’t bought treasuries before other than I Bonds.

Thank you.
I have never purchased T-Bills before, but I wanted to understand how it works. So today I place an order for new issue 1 month T-Bills at Fidelity and Vanguard. I turned on autoroll at Fidelity. It was pretty straight forward. When the T-Bills mature in early September, I will get to see how it works at Vanguard where there is no autoroll and at Fidelity with autoroll enabled. It may be worth just buying $1k worth of 1 month T-Bills at your broker just to understand how it works.
This is a good point. I may just try this at Schwab, although I'm not sure they have auto roll. Never bought T-bills before either.
Check out this blog post with instructions, it says Schwab has autoroll too:
https://thefinancebuff.com/treasury-bil ... arket.html
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by MikeG62 »

ruanddu wrote: Wed Aug 03, 2022 4:14 pm
MikeG62 wrote: Tue Aug 02, 2022 3:36 pm
ruanddu wrote: Sun Jul 31, 2022 8:58 pm Hello,

I have maxed out our I Bonds contributions for my wife and I this year and bought the 10k gifts for each other for next year. This is largely going to be used to store our savings and emergency fund.

Instead of keeping our other relatively large chunk of savings in a low yield bank savings account, does it make sense to buy some 6 month treasuries right now as also part of our savings / emergency fund along with the I Bonds? Seems with the relatively high rate on the 6 month treasuries now it makes sense to me but maybe there are better options I don’t know about (CDs, etc).

I would consider buying another year of I Bonds in your gift boxes (for 2024 delivery) before buying Treasuries. Delivery would be only 16 months away (and as you know you can't sell them for the first 12 months anyway).

As you know, you will earn 9.6% for the first six months. Then you'll get the Nov 1 rate reset for the next 6 months (which I think will be quite attractive). [Note that If the CPI remains flat from June through Sept (unlikely) the reset rate will be over 6.0%. That is not likely to happen, so figure you'll likely earn something like 7.5%+/- for the second six months or ~8.5% for the first 12 months.] Then hold for an additional 4 months and you'll be at January 2024 and could sell them should you choose to do so while not impairing any of the first 12 months interest. Or buy them in mid to late Oct, when you will know for sure what the second 6 month rate reset will be. Your holding period will be even shorter in that case (only about 14 months).

FWIW, my wife and I bought gift bonds for each other for 2023 and 2024 delivery back in April of this year. We intend to purchase another $10,000 for each other in late Oct for delivery in 2025 (~26 month holding period). The way I look at it is even if the Fed is successful in getting inflation to their 2.0% target by May 2023 (the first 2023 reset), I believe we will earn an approximate 5.0% annualized compounded yield for the ~26 month holding period (8.5% for the first 12 months, 2.0% for the second 12 months and 0% for the last three months). Can't touch that in any risk free investment I know of.
Good suggestion, thanks! To clarify, even though gifts aren’t delivered till 2024 for instance, they still collect all the interest from now until then, correct? Thanks again.
Yup. Same as bonds you own outright. Also, the 12 month holding period starts as soon as the bonds are placed in the gift box.
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Topic Author
ruanddu
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by ruanddu »

MikeG62 wrote: Wed Aug 03, 2022 5:31 pm
ruanddu wrote: Wed Aug 03, 2022 4:14 pm
MikeG62 wrote: Tue Aug 02, 2022 3:36 pm
ruanddu wrote: Sun Jul 31, 2022 8:58 pm Hello,

I have maxed out our I Bonds contributions for my wife and I this year and bought the 10k gifts for each other for next year. This is largely going to be used to store our savings and emergency fund.

Instead of keeping our other relatively large chunk of savings in a low yield bank savings account, does it make sense to buy some 6 month treasuries right now as also part of our savings / emergency fund along with the I Bonds? Seems with the relatively high rate on the 6 month treasuries now it makes sense to me but maybe there are better options I don’t know about (CDs, etc).

I would consider buying another year of I Bonds in your gift boxes (for 2024 delivery) before buying Treasuries. Delivery would be only 16 months away (and as you know you can't sell them for the first 12 months anyway).

As you know, you will earn 9.6% for the first six months. Then you'll get the Nov 1 rate reset for the next 6 months (which I think will be quite attractive). [Note that If the CPI remains flat from June through Sept (unlikely) the reset rate will be over 6.0%. That is not likely to happen, so figure you'll likely earn something like 7.5%+/- for the second six months or ~8.5% for the first 12 months.] Then hold for an additional 4 months and you'll be at January 2024 and could sell them should you choose to do so while not impairing any of the first 12 months interest. Or buy them in mid to late Oct, when you will know for sure what the second 6 month rate reset will be. Your holding period will be even shorter in that case (only about 14 months).

FWIW, my wife and I bought gift bonds for each other for 2023 and 2024 delivery back in April of this year. We intend to purchase another $10,000 for each other in late Oct for delivery in 2025 (~26 month holding period). The way I look at it is even if the Fed is successful in getting inflation to their 2.0% target by May 2023 (the first 2023 reset), I believe we will earn an approximate 5.0% annualized compounded yield for the ~26 month holding period (8.5% for the first 12 months, 2.0% for the second 12 months and 0% for the last three months). Can't touch that in any risk free investment I know of.
Good suggestion, thanks! To clarify, even though gifts aren’t delivered till 2024 for instance, they still collect all the interest from now until then, correct? Thanks again.
Yup. Same as bonds you own outright. Also, the 12 month holding period starts as soon as the bonds are placed in the gift box.
Thank you! This is a bit off topic but still pertains, in a worst-case scenario, how safe are I Bonds if say another depression happens and there is a liquidity crisis or something of that sort? I have read I Bonds are about as safe as you get these days, but still I always like to double-check. :)
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by ebeb »

Why bother about 6month t-bills with tiny amount of risk when you have almost same CD rates in schwab.com :shock:
Schwab's Highest-Yielding CDs by Maturity
Maturity 1 Mo 3 Mo 6 Mo 9 Mo 1 Yr 18 Mo 2 Yr 3 Yr 4 Yr 5 Yr 10 Yr
APY(%) 1 2.018 2.422 2.769 2.911 3.050 3.150 3.300 3.350 3.200 3.400
60% VOO | 35% BND | 5% CASH | | “If you feel you are in a blackhole, don’t give up. There’s a way out.” -Prof. Stephen Hawking
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by anon_investor »

ruanddu wrote: Wed Aug 03, 2022 6:16 pm
MikeG62 wrote: Wed Aug 03, 2022 5:31 pm
ruanddu wrote: Wed Aug 03, 2022 4:14 pm
MikeG62 wrote: Tue Aug 02, 2022 3:36 pm
ruanddu wrote: Sun Jul 31, 2022 8:58 pm Hello,

I have maxed out our I Bonds contributions for my wife and I this year and bought the 10k gifts for each other for next year. This is largely going to be used to store our savings and emergency fund.

Instead of keeping our other relatively large chunk of savings in a low yield bank savings account, does it make sense to buy some 6 month treasuries right now as also part of our savings / emergency fund along with the I Bonds? Seems with the relatively high rate on the 6 month treasuries now it makes sense to me but maybe there are better options I don’t know about (CDs, etc).

I would consider buying another year of I Bonds in your gift boxes (for 2024 delivery) before buying Treasuries. Delivery would be only 16 months away (and as you know you can't sell them for the first 12 months anyway).

As you know, you will earn 9.6% for the first six months. Then you'll get the Nov 1 rate reset for the next 6 months (which I think will be quite attractive). [Note that If the CPI remains flat from June through Sept (unlikely) the reset rate will be over 6.0%. That is not likely to happen, so figure you'll likely earn something like 7.5%+/- for the second six months or ~8.5% for the first 12 months.] Then hold for an additional 4 months and you'll be at January 2024 and could sell them should you choose to do so while not impairing any of the first 12 months interest. Or buy them in mid to late Oct, when you will know for sure what the second 6 month rate reset will be. Your holding period will be even shorter in that case (only about 14 months).

FWIW, my wife and I bought gift bonds for each other for 2023 and 2024 delivery back in April of this year. We intend to purchase another $10,000 for each other in late Oct for delivery in 2025 (~26 month holding period). The way I look at it is even if the Fed is successful in getting inflation to their 2.0% target by May 2023 (the first 2023 reset), I believe we will earn an approximate 5.0% annualized compounded yield for the ~26 month holding period (8.5% for the first 12 months, 2.0% for the second 12 months and 0% for the last three months). Can't touch that in any risk free investment I know of.
Good suggestion, thanks! To clarify, even though gifts aren’t delivered till 2024 for instance, they still collect all the interest from now until then, correct? Thanks again.
Yup. Same as bonds you own outright. Also, the 12 month holding period starts as soon as the bonds are placed in the gift box.
Thank you! This is a bit off topic but still pertains, in a worst-case scenario, how safe are I Bonds if say another depression happens and there is a liquidity crisis or something of that sort? I have read I Bonds are about as safe as you get these days, but still I always like to double-check. :)
They are super safe. They are only issued by the US Treasury via treasurydirect.gov. Since they are non-marketable they are no effected by the market, you redeem them directly from the the US Treasury via treasurydirect.gov. If the US Treasury failed, then you would have bigger problems.
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by ebeb »

anon_investor wrote: Wed Aug 03, 2022 6:23 pm If the US Treasury failed, then you would have bigger problems.
Even the FDIC insurance may not be worth the paper it is written on in such a case :D
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by anon_investor »

ebeb wrote: Wed Aug 03, 2022 6:21 pm Why bother about 6month t-bills with tiny amount of risk when you have almost same CD rates in schwab.com :shock:
Schwab's Highest-Yielding CDs by Maturity
Maturity 1 Mo 3 Mo 6 Mo 9 Mo 1 Yr 18 Mo 2 Yr 3 Yr 4 Yr 5 Yr 10 Yr
APY(%) 1 2.018 2.422 2.769 2.911 3.050 3.150 3.300 3.350 3.200 3.400
6mo T-Bills are 3% (better than 2.769%), are exempt from state/local income tax and are more liquid if needed to be sold earlier.
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by MikeG62 »

ebeb wrote: Wed Aug 03, 2022 6:21 pm Why bother about 6month t-bills with tiny amount of risk when you have almost same CD rates in schwab.com :shock:
Schwab's Highest-Yielding CDs by Maturity
Maturity 1 Mo 3 Mo 6 Mo 9 Mo 1 Yr 18 Mo 2 Yr 3 Yr 4 Yr 5 Yr 10 Yr
APY(%) 1 2.018 2.422 2.769 2.911 3.050 3.150 3.300 3.350 3.200 3.400
If you did the comparison in mid June you might have concluded the opposite. I was buying two year Treasuries then at yields over 3.4%. In the third week in July I was buying 12-month Treasuries at yields of ~3.25%. Keep in mind these yields are state tax free.

Treasury yields have sold off quite a bit in the last two weeks. As a result, some CD's have become quite attractive. Currently, those Schwab CD yields are attractive. However, if these are brokered CD's then you need to take into consideration the risks with brokered CD's (some are callable and they can be difficult to exit before maturity or without taking a large haircut).

Yesterday, I hopped on a NFCU 33-month special CD with a yield of 3.30%. Comparable term Treasuries were 3.0% at best.
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by ruanddu »

anon_investor wrote: Wed Aug 03, 2022 6:23 pm
ruanddu wrote: Wed Aug 03, 2022 6:16 pm
MikeG62 wrote: Wed Aug 03, 2022 5:31 pm
ruanddu wrote: Wed Aug 03, 2022 4:14 pm
MikeG62 wrote: Tue Aug 02, 2022 3:36 pm


I would consider buying another year of I Bonds in your gift boxes (for 2024 delivery) before buying Treasuries. Delivery would be only 16 months away (and as you know you can't sell them for the first 12 months anyway).

As you know, you will earn 9.6% for the first six months. Then you'll get the Nov 1 rate reset for the next 6 months (which I think will be quite attractive). [Note that If the CPI remains flat from June through Sept (unlikely) the reset rate will be over 6.0%. That is not likely to happen, so figure you'll likely earn something like 7.5%+/- for the second six months or ~8.5% for the first 12 months.] Then hold for an additional 4 months and you'll be at January 2024 and could sell them should you choose to do so while not impairing any of the first 12 months interest. Or buy them in mid to late Oct, when you will know for sure what the second 6 month rate reset will be. Your holding period will be even shorter in that case (only about 14 months).

FWIW, my wife and I bought gift bonds for each other for 2023 and 2024 delivery back in April of this year. We intend to purchase another $10,000 for each other in late Oct for delivery in 2025 (~26 month holding period). The way I look at it is even if the Fed is successful in getting inflation to their 2.0% target by May 2023 (the first 2023 reset), I believe we will earn an approximate 5.0% annualized compounded yield for the ~26 month holding period (8.5% for the first 12 months, 2.0% for the second 12 months and 0% for the last three months). Can't touch that in any risk free investment I know of.
Good suggestion, thanks! To clarify, even though gifts aren’t delivered till 2024 for instance, they still collect all the interest from now until then, correct? Thanks again.
Yup. Same as bonds you own outright. Also, the 12 month holding period starts as soon as the bonds are placed in the gift box.
Thank you! This is a bit off topic but still pertains, in a worst-case scenario, how safe are I Bonds if say another depression happens and there is a liquidity crisis or something of that sort? I have read I Bonds are about as safe as you get these days, but still I always like to double-check. :)
They are super safe. They are only issued by the US Treasury via treasurydirect.gov. Since they are non-marketable they are no effected by the market, you redeem them directly from the the US Treasury via treasurydirect.gov. If the US Treasury failed, then you would have bigger problems.
Appreciate the reply!
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by anon_investor »

ruanddu wrote: Wed Aug 03, 2022 9:42 pm
anon_investor wrote: Wed Aug 03, 2022 6:23 pm
ruanddu wrote: Wed Aug 03, 2022 6:16 pm
MikeG62 wrote: Wed Aug 03, 2022 5:31 pm
ruanddu wrote: Wed Aug 03, 2022 4:14 pm

Good suggestion, thanks! To clarify, even though gifts aren’t delivered till 2024 for instance, they still collect all the interest from now until then, correct? Thanks again.
Yup. Same as bonds you own outright. Also, the 12 month holding period starts as soon as the bonds are placed in the gift box.
Thank you! This is a bit off topic but still pertains, in a worst-case scenario, how safe are I Bonds if say another depression happens and there is a liquidity crisis or something of that sort? I have read I Bonds are about as safe as you get these days, but still I always like to double-check. :)
They are super safe. They are only issued by the US Treasury via treasurydirect.gov. Since they are non-marketable they are no effected by the market, you redeem them directly from the the US Treasury via treasurydirect.gov. If the US Treasury failed, then you would have bigger problems.
Appreciate the reply!
I am a big fan of I Bonds, my spouse and I have been buying them for a few years. We now count our I Bonds as a layer of our emergency fund.
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by ebeb »

anon_investor wrote: Wed Aug 03, 2022 9:44 pm
We now count our I Bonds as a layer of our emergency fund.
From what I read, I-bond money cannot be withdrawn for one year. Haven't had time to research what if someone really needed the money before 1 year even if some penalty, in an "emergency" :confused
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by Jerry55 »

You've had some great advice already.... I'll only add that I buy them 1 at a time, once per month for 6 months, so that one is available every month after 6 months, so I keep 6 in rotation.
If I wish to have them renew, I do it online thru the US Treasury account I have and always purchase them from.
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by ModifiedDuration »

ebeb wrote: Wed Aug 03, 2022 9:57 pm
anon_investor wrote: Wed Aug 03, 2022 9:44 pm
We now count our I Bonds as a layer of our emergency fund.
From what I read, I-bond money cannot be withdrawn for one year. Haven't had time to research what if someone really needed the money before 1 year even if some penalty, in an "emergency" :confused
Unfortunately, there is no way to redeem I Bonds in less than one year, unless you live in a Federally-declared disaster area.
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by ModifiedDuration »

I would also suggest buying I Bond gifts right now for January 2024 delivery.

If you were to redeem them in January 2024, you would probably earn in the 8% - 10% range between August 2022 - July 2023, then at least a little something in August 2023 and September 2023, risk-free courtesy of Uncle Sam.

If I Bond rates are still comparatively high in late 2023 and going into 2024, then you just continue to hold the I Bonds.

We have actually bought I Bonds for 2025 and 2026 delivery, too. That extremely high interest rate in the first year makes them attractive.
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by ruanddu »

Appreciate all the continued advice.

You guys are talking me into getting some more I Bonds for 2024 as well. :)
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by anon_investor »

ModifiedDuration wrote: Wed Aug 03, 2022 10:20 pm
ebeb wrote: Wed Aug 03, 2022 9:57 pm
anon_investor wrote: Wed Aug 03, 2022 9:44 pm
We now count our I Bonds as a layer of our emergency fund.
From what I read, I-bond money cannot be withdrawn for one year. Haven't had time to research what if someone really needed the money before 1 year even if some penalty, in an "emergency" :confused
Unfortunately, there is no way to redeem I Bonds in less than one year, unless you live in a Federally-declared disaster area.
+1. I have been buying I Bonds for a couple of years, so the ones bought before this year are all redeemable, and I count them as a layer of my emergency fund.
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by evelynmanley »

ebeb wrote: Wed Aug 03, 2022 9:57 pm
anon_investor wrote: Wed Aug 03, 2022 9:44 pm
We now count our I Bonds as a layer of our emergency fund.
From what I read, I-bond money cannot be withdrawn for one year. Haven't had time to research what if someone really needed the money before 1 year even if some penalty, in an "emergency" :confused

https://www.disasterassistance.gov/get- ... tance/4502

https://www.treasurydirect.gov/indiv/re ... saster.htm
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by ebeb »

MikeG62 wrote: Wed Aug 03, 2022 6:35 pm
If you did the comparison in mid June you might have concluded the opposite. I was buying two year Treasuries then at yields over 3.4%. In the third week in July I was buying 12-month Treasuries at yields of ~3.25%. Keep in mind these yields are state tax free.
Based on this info today I bought $1000 of US Treasury BILL 11/17/2022 CUSIP 912796W62 YTM 2.520/2.452% and cost basis was 993.06 at schwab.com. Is this ok to buy or there are better options and what is the better option to do on 11/17/2022.
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by MikeG62 »

ebeb wrote: Thu Aug 04, 2022 4:02 pm
MikeG62 wrote: Wed Aug 03, 2022 6:35 pm
If you did the comparison in mid June you might have concluded the opposite. I was buying two year Treasuries then at yields over 3.4%. In the third week in July I was buying 12-month Treasuries at yields of ~3.25%. Keep in mind these yields are state tax free.
Based on this info today I bought $1000 of US Treasury BILL 11/17/2022 CUSIP 912796W62 YTM 2.520/2.452% and cost basis was 993.06 at schwab.com. Is this ok to buy or there are better options and what is the better option to do on 11/17/2022.
Yeah that looks good. It is 15 weeks (105 days) to maturity, so a little over 3-months. 3-month rate was at 2.40% close of business today. You will earn 2.452% and holding period is an extra two weeks. Good job.
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by ebeb »

MikeG62 wrote: Thu Aug 04, 2022 5:25 pm
Yeah that looks good. It is 15 weeks (105 days) to maturity, so a little over 3-months. 3-month rate was at 2.40% close of business today. You will earn 2.452% and holding period is an extra two weeks. Good job.
Thanks :happy the bigger question is what to do after 105days once it matures in schwab.com account.
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by anon_investor »

ebeb wrote: Thu Aug 04, 2022 5:30 pm
MikeG62 wrote: Thu Aug 04, 2022 5:25 pm
Yeah that looks good. It is 15 weeks (105 days) to maturity, so a little over 3-months. 3-month rate was at 2.40% close of business today. You will earn 2.452% and holding period is an extra two weeks. Good job.
Thanks :happy the bigger question is what to do after 105days once it matures in schwab.com account.
Just check out rates then, buy another treasury if it makes sense.
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by ebeb »

anon_investor wrote: Thu Aug 04, 2022 5:40 pm
Just check out rates then, buy another treasury if it makes sense.
I was wondering what happens to the purchased t-bill does it automatically convert to cash at 105 days after maturity or it sits there as a t-bill and need to be sold off manually to convert to cash in the account to buy another later.
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by anon_investor »

ebeb wrote: Thu Aug 04, 2022 5:45 pm
anon_investor wrote: Thu Aug 04, 2022 5:40 pm
Just check out rates then, buy another treasury if it makes sense.
I was wondering what happens to the purchased t-bill does it automatically convert to cash at 105 days after maturity or it sits there as a t-bill and need to be sold off manually to convert to cash in the account to buy another later.
Assuming you bought it on the secondary market, at maturity the proceeds should end up in your settlement account.
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by MikeG62 »

ModifiedDuration wrote: Wed Aug 03, 2022 10:30 pm I would also suggest buying I Bond gifts right now for January 2024 delivery.

If you were to redeem them in January 2024, you would probably earn in the 8% - 10% range between August 2022 - July 2023, then at least a little something in August 2023 and September 2023, risk-free courtesy of Uncle Sam.

If I Bond rates are still comparatively high in late 2023 and going into 2024, then you just continue to hold the I Bonds.

We have actually bought I Bonds for 2025 and 2026 delivery, too. That extremely high interest rate in the first year makes them attractive.
Agree.
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by prettybogle »

ModifiedDuration wrote: Wed Aug 03, 2022 10:30 pm I would also suggest buying I Bond gifts right now for January 2024 delivery.

If you were to redeem them in January 2024, you would probably earn in the 8% - 10% range between August 2022 - July 2023, then at least a little something in August 2023 and September 2023, risk-free courtesy of Uncle Sam.

If I Bond rates are still comparatively high in late 2023 and going into 2024, then you just continue to hold the I Bonds.

We have actually bought I Bonds for 2025 and 2026 delivery, too. That extremely high interest rate in the first year makes them attractive.
How did you buy future year quota of i bonds now ? Also, what interest rate do they offer?
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Re: 6 Month Treasuries for Holding Some of Our Savings?

Post by ModifiedDuration »

prettybogle wrote: Fri Aug 05, 2022 8:12 am
ModifiedDuration wrote: Wed Aug 03, 2022 10:30 pm I would also suggest buying I Bond gifts right now for January 2024 delivery.

If you were to redeem them in January 2024, you would probably earn in the 8% - 10% range between August 2022 - July 2023, then at least a little something in August 2023 and September 2023, risk-free courtesy of Uncle Sam.

If I Bond rates are still comparatively high in late 2023 and going into 2024, then you just continue to hold the I Bonds.

We have actually bought I Bonds for 2025 and 2026 delivery, too. That extremely high interest rate in the first year makes them attractive.
How did you buy future year quota of i bonds now ? Also, what interest rate do they offer?
This will explain how to gift I Bonds better than I can:

https://thefinancebuff.com/buy-i-bonds-as-gift.html

This I Bond thread is rather comprehensive:

viewtopic.php?t=346091&hilit=I+bonds

If you buy I Bonds as a gift right now (to be delivered in a future year), the I Bonds would earn an annual rate of 9.62% for the first 6 months (and the rate for the next 6 months is shaping up to be high, too) and the one-year lock period would also start now.

In other words, a gift bought now could be delivered to the other party in January 2023 and redeemed in August 2023 (subject to losing 3 months interest due to redeeming before 5 years).

Another gift could be delivered and redeemed in January 2024 (subject to 3 months interest forfeiture due to redeeming before 5 years).
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