Treasuries

[2Driver]

For those interested, this paper on supply shocks and their effects may be worth reading.

https://www.nber.org/system/files/chapters/c9160/revisions/c9160.rev2.pdf

well I made it to page 40 something before my brain started to overheat.

 

[caribbean20]

Dipped my toes into the pond yesterday. Bought the 3 month (3.5%) and 6 month (3.75%). Very pleased to find a home for idle cash. I may not have even thought about the opportunity, but for this thread.

It’s funny, mentioned T Bills to several friends yesterday, we’re all recently retired finance guys. They hadn’t considered T Bills either. It’s been so long with zero rates on our cash savings, takes some getting used to.

 

[2Driver]

Cool. The only thing to remind folks is that T-bills ( < 12 months) don’t pay interest - buy at disccount, matures at par So you don’t get income until they mature.

Notes and bonds pay interest twice a year and you may also get them at a discount or premium ( depending on market conditions) both of which goes into the YTM - yield to maturity rate. Real important to go by YTM and the maturity date.

 

[Christopher Lucero]

Dipped my toes into the pond yesterday. Bought the 3 month (3.5%) and 6 month (3.75%). Very pleased to find a home for idle cash. I may not have even thought about the opportunity, but for this thread.

It’s funny, mentioned T Bills to several friends yesterday, we’re all recently retired finance guys. They hadn’t considered T Bills either. It’s been so long with zero rates on our cash savings, takes some getting used to.

you already got 10k in those 9.5% I-bonds?

I bonds — TreasuryDirect

www.treasurydirect.gov

 

[2Driver]

I looked into i bonds.

Nice for long term but they are 30 years for only 10k max

you have to set up another financial account to track, no broker purchases

You dont get interest payments until you cash in the bond so for income they dont provide any, but I assume you pay taxes on that interest yearly

You cant sel for a year and under 5 years you forfeit 3 months interest

Its also a floating rate tied to inflation. inflation goes back to 2% they will too

I guess they have their place

 

[coolchange]

But it’s still basically 9.75 for 15 months. Can’t imagine that number going down anytime soon?
Edit 15 month wait for 12 at 9.75 +-

 

[coolchange]

Cool. The only thing to remind folks is that T-bills ( < 12 months) don’t pay interest - buy at disccount, matures at par So you don’t get income until they mature.

Notes and bonds pay interest twice a year and you may also get them at a discount or premium ( depending on market conditions) both of which goes into the YTM - yield to maturity rate. Real important to go by YTM and the maturity date.

So notes and bonds interest are added to the principal and compounded?

 

[2Driver]

So notes and bonds interest are added to the principal and compounded?

Ive never bought notes or bonds but my understanding from what ive read is that it is fixed interest on the initial bond value

Im not sure you can get to the interest unless you sell the bond which makes it less attractive if you need income.

Maybe some else can chime in on interest, and taxation of notes and bonds vs bills .

The last thing you want is a new yesrly tax burden with out the income to go with it.

 

[caribbean20]

Cool. The only thing to remind folks is that T-bills ( < 12 months) don’t pay interest - buy at disccount, matures at par So you don’t get income until they mature.

Notes and bonds pay interest twice a year and you may also get them at a discount or premium ( depending on market conditions) both of which goes into the YTM - yield to maturity rate. Real important to go by YTM and the maturity date.

Yup, aware of the buy at discount, but good to point out to others. Don’t need the cash and assume as a “cash basis taxpayer,” don’t pay tax on the income until received. It’s all new to me.

you already got 10k in those 9.5% I-bonds?

I bonds — TreasuryDirect

www.treasurydirect.gov

No I don’t have those I-Bonds. Will have a look. Thanks. For us, it’s been equities, munis (we use Nuveen), cash and real estate.

 

[DaBank]

So how does these I Bonds work?
How and when are you taxed?
The 9.75% is the guaranteed rate, and how long do you have your money locked up?
Thanks

 

[530RL]

So how does these I Bonds work?
How and when are you taxed?
The 9.75% is the guaranteed rate, and how long do you have your money locked up?
Thanks

The best thing to do is go to Treasuries Direct which is a place to transact with the Treasury Department directly. See links below.

But the basics are:

Rates & Terms​

• I bonds have an annual interest rate derived from a fixed rate and a semiannual inflation rate.
• Interest, if any, is added to the bond monthly and is paid when you cash the bond.
• I bonds are sold at face value; i.e., you pay $50 for a $50 bond.

Redemption Information​

• Minimum term of ownership: 1 year
• Interest-earning period: 30 years or until you cash them, whichever comes first
• Early redemption penalties:
  • Before 5 years, forfeit interest from the previous 3 months
  • After 5 years, no penalty

Tax Considerations​

• Savings bonds are exempt from taxation by any State or political subdivision of a State, except for estate or inheritance taxes.
• Interest earnings are subject to Federal income tax.
• Interest earnings may be excluded from Federal income tax when used to finance education (see education tax exclusions).

Understand you can only buy 10,000 per year, not 10,000 total.

I bonds — TreasuryDirect

www.treasurydirect.gov

Treasury Direct has a lot of resources and is a good way to buy bills, notes, bonds and other government savings products directly from the government. It has a reserch center that is done in an easy to understand format. Definitely worthwhile for those interested in fixed income.

Home — TreasuryDirect

www.treasurydirect.gov

 

[coolchange]

That’s a calendar year. So coming up you essentially buy 20.000 with only a few months difference in maturity.

 

[mesquito_creek]

So how does these I Bonds work?
How and when are you taxed?
The 9.75% is the guaranteed rate, and how long do you have your money locked up?
Thanks

Zero state or local tax…. For the feds you can pay annually or when you sell, your choice.

You never loose any principal on treasury ibonds only some of the interest of you sell early. Basically is a five year commitment to get the full ~9.5 interest.

My understanding is you can buy 10k per person per calendar year… so you and a spouse could get 40k bought between dec and Jan for example. Then 10/20k more every year if the rates are good.

I did it for my wife and I this past year and will do it again come Jan. I am retired and loving the high interest low risk fixed income they provide. First time to get these type of return in my memory.

 

[2Driver]

Zero state or local tax…. For the feds you can pay annually or when you sell, your choice.

You never loose any principal on treasury ibonds only some of the interest of you sell early. Basically is a five year commitment to get the full ~9.5 interest.

My understanding is you can buy 10k per person per calendar year… so you and a spouse could get 40k bought between dec and Jan for example. Then 10/20k more every year if the rates are good.

I did it for my wife and I this past year and will do it again come Jan. I am retired and loving the high interest low risk fixed income they provide. First time to get these type of return in my memory.

So as far as for real income they don’t provide any until you sell the bond. If you can wait 5-30 years for that income then I guess it’s ok.

 

[DaBank]

The best thing to do is go to Treasuries Direct which is a place to transact with the Treasury Department directly. See links below.

But the basics are:

Rates & Terms​

• I bonds have an annual interest rate derived from a fixed rate and a semiannual inflation rate.
• Interest, if any, is added to the bond monthly and is paid when you cash the bond.
• I bonds are sold at face value; i.e., you pay $50 for a $50 bond.

Redemption Information​

• Minimum term of ownership: 1 year
• Interest-earning period: 30 years or until you cash them, whichever comes first
• Early redemption penalties:
  • Before 5 years, forfeit interest from the previous 3 months
  • After 5 years, no penalty

Tax Considerations​

• Savings bonds are exempt from taxation by any State or political subdivision of a State, except for estate or inheritance taxes.
• Interest earnings are subject to Federal income tax.
• Interest earnings may be excluded from Federal income tax when used to finance education (see education tax exclusions).

Understand you can only buy 10,000 per year, not 10,000 total.

I bonds — TreasuryDirect

www.treasurydirect.gov

Treasury Direct has a lot of resources and is a good way to buy bills, notes, bonds and other government savings products directly from the government. It has a reserch center that is done in an easy to understand format. Definitely worthwhile for those interested in fixed income.

Home — TreasuryDirect

www.treasurydirect.gov

Thank you for the information.

Basically it looks like the rates change twice a year. If I bought a bond today the current rate is guaranteed for 6 months and then it changes to the new rate that can be higher or lower. You can only buy $10k per year and you can not touch the money for one year, after one year you pay 3 month interest penalty and after 5 year's there is now penalty to withdraw.
There is no state income tax or federal.

Is the above correct?
My only other question is are you taxed federal every year or only when you withdraw the money?

 

[DaBank]

Zero state or local tax…. For the feds you can pay annually or when you sell, your choice.

You never loose any principal on treasury ibonds only some of the interest of you sell early. Basically is a five year commitment to get the full ~9.5 interest.

My understanding is you can buy 10k per person per calendar year… so you and a spouse could get 40k bought between dec and Jan for example. Then 10/20k more every year if the rates are good.

I did it for my wife and I this past year and will do it again come Jan. I am retired and loving the high interest low risk fixed income they provide. First time to get these type of return in my memory.

How I read it if you bought right now at the 9.5% interest that rate is only guaranteed for 6 month's and then it goes to the current rate? I am not sure if that is correct?

 

[coolchange]

Zero state or local tax…. For the feds you can pay annually or when you sell, your choice.

You never loose any principal on treasury ibonds only some of the interest of you sell early. Basically is a five year commitment to get the full ~9.5 interest.

My understanding is you can buy 10k per person per calendar year… so you and a spouse could get 40k bought between dec and Jan for example. Then 10/20k more every year if the rates are good.

I did it for my wife and I this past year and will do it again come Jan. I am retired and loving the high interest low risk fixed income they provide. First time to get these type of return in my memory.

15month commitment for full interest minus 3months for 12 month minimum.

 

[c_land]

Dang 4 handle on the 1 Year

 

[530RL]

Thank you for the information.

Basically it looks like the rates change twice a year. If I bought a bond today the current rate is guaranteed for 6 months and then it changes to the new rate that can be higher or lower. You can only buy $10k per year and you can not touch the money for one year, after one year you pay 3 month interest penalty and after 5 year's there is now penalty to withdraw.
There is no state income tax or federal.

Is the above correct?
My only other question is are you taxed federal every year or only when you withdraw the money?

There is no state tax.

You can elect to pay the federal tax 1) annually, 2) when you sell the bond or 3) at maturity which would be 30 years from when you purchased it. For example, if you had a year with little or no income where your tax rates were very low, that would be a time to take a bunch of the income up to where you start paying tax.

They are subject to estate tax both federally and if applicable, state.

You may be able to get out of the federal tax on these bonds if used for education costs but that exemption has lots of rules.

The rest is

 

[mesquito_creek]

So as far as for real income they don’t provide any until you sell the bond. If you can wait 5-30 years for that income then I guess it’s ok.

It’s surely real income producing… just not instant. Probably not your young persons move unless you have taken advantage of every other tax deferred vehicle. And for old people like me rolling 3-5 years of risk free/fixed investment/savings living expenses out of equities and real estate… it just one more arrow in the quiver. Straight from the .Gov with no middleman is sweet.

Super non-baller, turtle beats the hare type stuff

 

[2Driver]

It’s surely real income producing… just not instant. Probably not your young persons move unless you have taken advantage of every other tax deferred vehicle. And for old people like me rolling 3-5 years of risk free/fixed investment/savings living expenses out of equities and real estate… it just one more arrow in the quiver. Straight from the .Gov with no middleman is sweet.

Super non-baller, turtle beats the hare type stuff

Have you looked at JEPI etf 9.82%. dividends pays out monthly

 

[mesquito_creek]

Have you looked at JEPI etf 9.82%. dividends pays out monthly

If it pays dividends that are taxed at dividends with a 1098-div come tax time that sucks. Taxed at 15% plus 3.8% Medicare sur tax for a total of 18.8%, not including state tax. No thanks. Will park it in the bond and wait for advantageous tax rate in future. Potentially zero if a tax year AGI is under 80k for a married couple.

 

[pronstar]

You can also play the bond game with EFT’s like these:
Simplify US Equity PLUS Downside Convexity ETF (SPD)

Simplify Nasdaq 100 PLUS Downside Convexity ETF (QQD)

iShares Core Aggregate Bond ETF (AGG)

Simplify Risk Parity Treasury ETF (TYA)

 

[2Driver]

LOL I feel like a squirrel in the middle of the road sometime. Guess I keep rolling 3-6 month t bills and wait for the S&P to hit 3000 then jump in some DIV ETF‘s full swing unless paper is 7% by then.

 

[boatnam2]

LOL I feel like a squirrel in the middle of the road sometime. Guess I keep rolling 3-6 month t bills and wait for the S&P to hit 3000 then jump in some DIV ETF‘s full swing unless paper is 7% by then.

Im sure this is a dumb question but how do you purchase your t-bills? treasury direct?

 

[2Driver]

Im sure this is a dumb question but how do you purchase your t-bills? treasury direct?

Schwab super easy

 

[Havasu blue label]

Bonds min 7 year hold usually doubles

 

[c_land]

How long does everyone think this continues before something blows or the central planners intervene (treasury or fed)? One of the Fed's self-assigned mandates is smooth market functioning.

 

[2Driver]

I just bought a 6-month T bill at 3.881%.

 

[boatnam2]

I just bought a 6-month T bill at 3.881%.

Just picked up a few around the same.

 

[2Driver]

At some point I'm going to start nibbling on SCHD and JEPI in an attempt to get future market appreciation long term and still getting current income yield. Can't say we bottomed or not lots of very astute money managers are calling for 3000 -3400 on the S&P based on PE......... IDK.

 

[coolchange]

I’ve been holding off. Isn’t fed saying they’re going to keep raising the rate the same as saying the rate on treasuries is going to go up also?

 

[2Driver]

I’ve been holding off. Isn’t fed saying they’re going to keep raising the rate the same as saying the rate on treasuries is going to go up also?

Do the math on waiting, it doesn’t pan out.

How high would rates have to jump from today on a 3- month tbill to make up for the 3.2% annual yield you are losing while waiting?

If I did the math right, if you bought a 3-month today at 3.2 vs buying a 6 month at 3.88 your next 3 month would have to equal 4.5% to match buying the 6 month today. I don’t think the 3 month will go up 1.3% in 90 days. LOL if I did that right.

Anyone have a good site for determining this comparison?

 

[MSum661]

How long does everyone think this continues before something blows or the central planners intervene (treasury or fed)? One of the Fed's self-assigned mandates is smooth market functioning.

Since you're asking.....I think something is going to break.............soon. No joke.
The velocity is the tell-tale. jmo. Fed Put could be on deck.

 

[UltraLucky]

Any experience with Callable yield notes? 9 to 11% at 30% contingent tied to NDX/RTY/SPX

 

[coolchange]

Do the math on waiting, it doesn’t pan out.

How high would rates have to jump from today on a 3- month tbill to make up for the 3.2% annual yield you are losing while waiting?

If I did the math right, if you bought a 3-month today at 3.2 vs buying a 6 month at 3.88 your next 3 month would have to equal 4.5% to match buying the 6 month today. I don’t think the 3 month will go up 1.3% in 90 days. LOL if I did that right.

Anyone have a good site for determining this comparison?

Waiting a week moved the rate from 4.0? To 4.1? Is the rate locked in on the buy or does it move? I know what your saying, time out can’t make up for the loss if you’re not in at slightly lower number.

 

[2Driver]

Waiting a week moved the rate from 4.0? To 4.1? Is the rate locked in on the buy or does it move? I know what your saying, time out can’t make up for the loss if you’re not in at slightly lower number.

When you buy a Tbill there is 0 coupon ( no interest payment). You buy them at a discount and get redeemed at 100% at maturity. The spread between the discount at purchase and full value at maturity is your yield, so as long as you hold until maturity you are guaranteed that yield. …. I think that’s what your asking? Always look at the YTM figure when looking at them ( yield to maturity)


If you buy notes ( they pay interest) on the open market you may find a 2 year note maturing in 6 months someone is selling. The YTM there will include any interest plus the calculated discount to come up with a YTM figure.

 

[LargeOrangeFont]

When you buy a Tbill there is 0 coupon ( no interest payment). You buy them at a discount and get redeemed at 100% at maturity. The spread between the discount at purchase and full value at maturity is your yield, so as long as you hold until maturity you are guaranteed that yield. …. I think that’s what your asking? Always look at the YTM figure when looking at them ( yield to maturity)


If you buy notes ( they pay interest) on the open market you may find a 2 year note maturing in 6 months someone is selling. The YTM there will include any interest plus the calculated discount to come up with a YTM figure.

Buying some moar tomorrow

 

[caribbean20]

I set up the Treasury Direct deal to buy an iBond the other day. They promptly took my $10K, plus another $10K. Reversed the charge the next day, 24 hours later, but geez, really.

And that concludes my dealing with that government entity. Never again. I should have known better.

 

[v6toy4x]

Is there a limit on how much you can purchase in treasury bills? I would be happy at no risk, 12 months for 4% on stuff that is just sitting right now.

 

[c_land]

Is there a limit on how much you can purchase in treasury bills? I would be happy at no risk, 12 months for 4% on stuff that is just sitting right now.

There are entire countries that own trillions of US debt. Smash that order button lol

 

[coolchange]

I set up the Treasury Direct deal to buy an iBond the other day. They promptly took my $10K, plus another $10K. Reversed the charge the next day, 24 hours later, but geez, really.

And that concludes my dealing with that government entity. Never again. I should have known better.

Oops, sorry. Ya I was thinking setting up a slush- transfer acct. for this stuff.

 

[caribbean20]

Oops, sorry. Ya I was thinking setting up a slush- transfer acct. for this stuff.

We think alike. I did just that when I bought Bitcoin years ago. Didn’t think I needed it for a government entity, but these guys must be rank amateurs.

This is the difference between socialism (Treasury Direct) and capitalism (Schwab, Fidelity, etc). I’ve done thousands of transactions with brokers and banks and NEVER did they pull an unauthorized ACH.

When I tried to contact Treasury Direct, it was no text, no email, only a phone call . . . with a 2 HOUR WAIT. Fuck that, I just waited and those dolts figured it out on their own.

You call Fidelity, Schwab or Wells, you get a live, English speaking professional in minutes. Buyer beware with Treasury Direct.

 

[boatnam2]

Logging into Treasury direct is a PIA, I gave it a try and wont be using it again.

 

[2Driver]

Logging into Treasury direct is a PIA, I gave it a try and wont be using it again.

I just buy everything through Schwab, super easy to find, filter and sort what ever you want to research. Pick your choice, put in how much you want , hit buy -done.

 

[boatnam2]

I just buy everything through Schwab, super easy to find, filter and sort what ever you want to research. Pick your choice, put in how much you want , hit buy -done.

10-4, using Fidelity seems to work fine.

 

[c_land]

4% on the US10Y. Wow.

 

[brgrcru]

Was hoping for that meteor to hit earth

Damn it NASA! you crashed into that meteor yesterday at 15,000 mph

Should of just let it go

Damn it. !

 

[Orange Juice]

LOL I feel like a squirrel in the middle of the road sometime. Guess I keep rolling 3-6 month t bills and wait for the S&P to hit 3000 then jump in some DIV ETF‘s full swing unless paper is 7% by then.

I’m starting to ladder into 2 year T-bills. It’s been about 30+ years since I owned any treasuries. I don’t think there’s going to be much upside to the stock market for at least a 3-4 years.

My stocks are all down. I added some stocks recently, on the dip, only to find out there is more downside.

I’m adding Electric Vehicle charging companies. Its my 2 year project.
Im hoping one or both of them, will maintain market share. I picked one east coast business, and one west coast business.,
Gas is cheap in the Midwest, so I figure it might be 5-10 years, before that part of the country needs large volumes of these charging machines/locations.

 

[Orange Juice]

They will just print it. My interpretation of this thing is that it is a classic short squeeze and the people holding the bag(Cash and bonds) are gonna get fucked. Spend all your cash and buy shit now asap buy buy buy

I think we’re past that point now. Printing money is doing nothing now. There is literally nothing on the shelves to buy.

I have stuff on back order taking longer than 6 months. They don’t even want my name. Told me to call back in January 2023.