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T-bills vs. CDs

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  • Nutria
    replied
    Originally posted by anotherreader View Post
    fidelity's money market funds have outrageous er's, and my yields are much better with this approach.
    spaxx? (Why doesn't vBulletin let me write "SPAXX"?)

    Leave a comment:


  • kork13
    replied
    I've always been curious about T-Bills (and the various other 'flavors' of federal debt), but thus far I've only worked with their bonds (I love my I-Bonds). Maybe this is as good an opportunity as any to actually try to learn some more about it.......

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  • scfr
    replied
    For anyone interested, you can open an account at Treasury Direct and buy T-Bills (and other Treasuries) directly:

    https://www.treasurydirect.gov/RS/UN-AccountCreate.do

    Leave a comment:


  • AnotherReader
    replied
    Originally posted by Nutria View Post
    T-bills, or a t-bill fund? And how much does their commission reduce your yield?
    There is no commission. They are bought at the auction. Fidelity's money market funds have outrageous ER's, and my yields are much better with this approach.

    I believe the other large brokers offer the same deal.

    Because the premium is so low on longer duration bills and notes, I'm only buying as a substitute for money market funds right now. If the yield curve inverts, there is a strong chance of a recession and it looks like that might happen.

    Leave a comment:


  • corn18
    replied
    Rates are getting into that weird territory where short term rates are going up faster than long rates. That is flattening the yield curve. If the yield curve inverts, we should expect a recession. And that is the MO of the FED these days. Raise rates until they induce a recession.



    The short term result is short term treasuries yielding higher than CD's. And the risk associated with longer term bonds in a rising rate environment are not worth the yield premium.

    I keep my short term money in a treasury money market fund with a 30 day SEC yield of 1.86%. All my bonds are in medium duration bond funds (5-7 years). While the bond fund NAV has been perfectly flat for 2018, they are yielding a solid 3.46%. People get all excited when the NAV on a bond fund goes down when interest rates rise. Be patient. The total return will normalize that.

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  • Nutria
    replied
    Originally posted by AnotherReader View Post
    I'm buying T-Bills every week through Fidelity. Four week to six month yields are substantially higher than CD's and the income is state income tax-free.
    T-bills, or a t-bill fund? And how much does their commission reduce your yield?

    Leave a comment:


  • james.hendrickson
    replied
    Excellent points guys.

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  • AnotherReader
    replied
    I'm buying T-Bills every week through Fidelity. Four week to six month yields are substantially higher than CD's and the income is state income tax-free.

    Leave a comment:


  • Nutria
    started a topic T-bills vs. CDs

    T-bills vs. CDs

    T-bills seem to be yielding more than 12 month CDs (especially in sub-$5000 quantities).

    https://www.treasurydirect.gov/insti...nnceresult.htm

    https://www.ally.com/bank/high-yield-cd/

    Thus, why should I buy CDs instead of T-bills?

    If I already have T-bills, why should I transition to CDs?
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