what happens after treasuries mature in Vanguard

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logiclife
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what happens after treasuries mature in Vanguard

Post by logiclife »

I recently started investing in treasuries in Vanguard for 3, 6,12 months etc. I tried searching in the forum but I don't know what will happen to the funds after they mature.is there an automatic process that Vanguard does to move it back to the settlement account!?

can I put them back in settlement fund account and then buy some mutual funds!? I don't know what the process will be once they mature.

Thanks much for the help in advance
jebmke
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Re: what happens after treasuries mature in Vanguard

Post by jebmke »

When a bond matures the funds will go into your settlement fund.
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221B_BakerStreet
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Re: what happens after treasuries mature in Vanguard

Post by 221B_BakerStreet »

The funds from the matured treasuries will go into your Settlement Fund on the day of maturity. You can then use the funds to invest in a mutual fund, ETF or a new treasury.
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logiclife
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Re: what happens after treasuries mature in Vanguard

Post by logiclife »

thanks so much for your time
Tom_T
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Re: what happens after treasuries mature in Vanguard

Post by Tom_T »

Vanguard will send you a message, in advance, that you have bonds that are going to mature.
tfunk
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Re: what happens after treasuries mature in Vanguard

Post by tfunk »

221B_BakerStreet wrote: Mon Sep 05, 2022 10:35 am The funds from the matured treasuries will go into your Settlement Fund on the day of maturity. You can then use the funds to invest in a mutual fund, ETF or a new treasury.
Are you sure it goes into the settlement fund the day it matures or is it after the market close. I have a Treasury maturing this Friday 9/9. I would much prefer to reinvest this Friday rather than wait until Monday 9/12.
221B_BakerStreet
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Re: what happens after treasuries mature in Vanguard

Post by 221B_BakerStreet »

At Vanguard, the funds will get posted after the market close on the day the bond matures, so, unfortunately, you will not be able to reinvest the funds until the next business day. I just had a treasury mature on 9/1; the funds were available, the following day. When I have sold ETFs at Vanguard, it usually takes 2-3 business days for the transaction to settle, so those funds typically cannot be reinvested until the settlement process finishes. For the Treasuries that matured the other day, the money was put directly into my settlement fund without the typical 2-3 day settlement time.
Faith20879
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Re: what happens after treasuries mature in Vanguard

Post by Faith20879 »

221B_BakerStreet wrote: Mon Sep 05, 2022 2:03 pm At Vanguard, ..., you will not be able to reinvest the funds until the next business day. ...
Perhaps I am not reading you correctly. I have always been able to roll a bill that matures on dd/mm/yy right away into a new bill that has a settlement date of dd/mm/yy, not the next day.
ruud
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Re: what happens after treasuries mature in Vanguard

Post by ruud »

221B_BakerStreet wrote: Mon Sep 05, 2022 2:03 pm When I have sold ETFs at Vanguard, it usually takes 2-3 business days for the transaction to settle, so those funds typically cannot be reinvested until the settlement process finishes.
I don’t know how it works with Treasuries, but at Vanguard (and I assume other brokers as well) you can buy other ETFs right away with the proceeds from an ETF sale. You will get a warning about buying with unsettled funds, but because the sale and purchase will settle on the same day, it all works out.
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221B_BakerStreet
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Re: what happens after treasuries mature in Vanguard

Post by 221B_BakerStreet »

Perhaps I am incorrect. When I checked my account before the market opened on 9/1, the money from the maturing Treasury was not posted to my Settlement fund but was there when I checked after the market close, so perhaps it would be available to buy another Treasury. If the Vanguard site throws up a warning about using unsettled funds for a transaction, I typically cancel the transaction and wait until everything settles (out of an abundance of caution).
urban
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Re: what happens after treasuries mature in Vanguard

Post by urban »

ruud wrote: Mon Sep 05, 2022 2:45 pm I don’t know how it works with Treasuries, but at Vanguard (and I assume other brokers as well) you can buy other ETFs right away with the proceeds from an ETF sale. You will get a warning about buying with unsettled funds, but because the sale and purchase will settle on the same day, it all works out.
^This. The only limitation is that Vanguard (and other brokerages that allow to buy with unsettled funds) do not want you to sell what you bought with unsettled funds before the funds are settled. They call it a free ride.
Tom_T
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Re: what happens after treasuries mature in Vanguard

Post by Tom_T »

Vanguard is good about showing you the amount of "funds available to trade." If you sell something, you should see that amount in the "available" bucket right away. It will all wash out on settlement day, as was noted. I've sold and bought the same day with no issues. Just be careful of the "free ride", as urban said.
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Kevin M
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Re: what happens after treasuries mature in Vanguard

Post by Kevin M »

Based on experience from some recently matured Treasuries at Vanguard, as others have said, the proceeds do not show as available to trade the day of maturity while the market is open. This is unlike Fidelity, which shows the proceeds as available to trade the day of maturity.

However, I believe that at Vanguard you should be able to enter an order for a Treasury that settles on or after the day of maturity, even though you don't have the necessary "available to trade" amount shown in balances, and it should work out without any trading penalties. I'm pretty sure I've done that. I recall receiving a warning about it, but not being prevented from entering the order.

Kevin
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urban
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Re: what happens after treasuries mature in Vanguard

Post by urban »

From my experience, Vanguard just requires to come up with available funds on the settlement date (and it could be even unsettled funds) in the sweep position. So one can place order for an auction without having available funds. But maybe it works only if there enough funds in other positions in the brokerage account.
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Mel Lindauer
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Re: what happens after treasuries mature in Vanguard

Post by Mel Lindauer »

I've bought and sold at Vanguard on the same settlement date without showing funds available for the purchase without any problems. The key is the settlement date for the sale or maturity must be the same or earlier than the purchase.
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