T-Bills

[Jmort1754]

Can someone give me the down and dirty like explaining to toddler of them/?

 

[LostArra]

Pretty simple.
Toddlers including myself don't worry about competitive bids.
Don't expect to impress friends and family with purchase but you will sleep well.

How to Buy Treasury Bills

A Treasury Bill, or T-Bill, is a short-term debt obligation issued by the U.S. Treasury and backed by the U.S. government with a maturity of less than one year.

www.investopedia.com

 

[EdP]

Google can. Here is one example. https://www.financestrategists.com/...SAAEgJYkvD_BwE#what-are-treasury-bills-tbills

There are also mutual funds that invest in T-bills exclusively, protect your initial investment, and pay a variable interest rate. https://am.jpmorgan.com/us/en/asset...securities-money-market-fund-morgan-4812a2827

 

[largerack]

Short-term debt instrument sold and backed by the US federal gubment. Purchase at a discount to face value, and receive face value when the t-bill reaches maturity. Different maturities ranging from weeks up to a year. Price for a particular t-bill issue is determined via auction. You can participate as an individual at treasury direct website, or you can also buy on secondary market through your brokerage acct etc.

Is there something specific you want to know?

 

[BBob]

Some brokers like Schwab allow you to buy from the secondary market and to also participate in buying from auction. Buying from auction is simpler as far as understanding or choosing what you are buying. When buying from auction the return will not be stated because it hasn’t been determined yet. You don’t worry about that because it will be right on or very close to the previous auction.

What brokerage are you using?

 

[HuntHarder]

No state income tax on profits as well.

 

[Ucsdryder]

No state income tax on profits as well.

Good point here. The 5.4% is a little higher when taking no state tax into consideration. I’ve been buying t bills the last year while the market continued to climb.

Just bought some more yesterday. 6 months puts it right after the election and then hopefully it’s time to jump back into the market.

 

[Dawg In Montana]

Trying to time the market is a fool’s game

 

[HuntHarder]

Whether or not it is considered timing or not is debatable. Moving money into less risk with still a decent return is not always a bad thing. Over the last year, I would almost call it an insurance policy. Nothing wrong with grabbing some Tbills as well as still owning a decent amount of stocks.

 

[eddielasvegas]

THIS woman's channel is fantastic. I mean excellent. She has tons of finance related vids including what you are asking about.

Good luck,

Eddie

 

[Lee_R]

Good point here. The 5.4% is a little higher when taking no state tax into consideration. I’ve been buying t bills the last year while the market continued to climb.

Just bought some more yesterday. 6 months puts it right after the election and then hopefully it’s time to jump back into the market.

Financial advisor here. This isn't quite true from my understanding. Any coupon payments are state tax free, the appreciation (when bought at discount) is not from my experience. An accountant could verify or deny what I believe is true.

 

[HuntHarder]

Topic no. 403, Interest received | Internal Revenue Service

Topic No. 403 Interest Received

www.irs.gov

 

[BeaverHunter]

Don’t have to pay state income taxes from t-bill income. Still subject to federal income taxes.

 

[Dawg In Montana]

Whether or not it is considered timing or not is debatable. Moving money into less risk with still a decent return is not always a bad thing. Over the last year, I would almost call it an insurance policy. Nothing wrong with grabbing some Tbills as well as still owning a decent amount of stocks.

Buying t-bills or other less risky assets certainly isn’t timing the market. When it turns into “I don’t like this market right now for stocks so I’m going to sit in t-bills and then buy stocks in 6 months with that money” it becomes market timing. I didn’t quote the post but I was responding to the post directly above mine.

 

[2531usmc]

Yes, it’s true that timing th market is a fools game.

It’s also true that the federal govt vomited ~7T into a zero interest rate economy (that was held artificially low) during Covid. In addition, we are running up debt to the tune if ~1T every 100 days.

The result of this fiasco is we are seemingly entering a stagflationary economy and interest on the debt is more than we are spending on defense.

And, the stock market is at all time highs. Holding cash at 5+% is more than prudent at this time.

The current blowup/meltdown of commercial real estate should serve as a stark warning to all of us.

 

[doc holiday13]

I've been buying up all kinds of them recently

 

[Dawg In Montana]

Another thing to keep in mind is real vs nominal rates on the bills (or any asset for that matter). 5% is the nominal return, and the real return is somewhere around 2% (assuming inflation is 3% right now).

 

[Ucsdryder]

Another thing to keep in mind is real vs nominal rates on the bills (or any asset for that matter). 5% is the nominal return, and the real return is somewhere around 2% (assuming inflation is 3% right now).

Is the stock market not subject to inflation?

 

[Dawg In Montana]

Is the stock market not subject to inflation?

The stock market is covered by the “or any asset for that matter.” Bonds are more often talked about in real vs nominal terms.