Retired 63 yrs old. I am continuing as planned with t-bill ladders (3, 6, and 12 month durations). We're no longer in the building wealth stage, so we are more conservatively into keeping a good plan in motion, and trying to maintain simplicity. Definitely we are staying away from bonds longer term than 12 months as it would reduce liquidity and increase the stress if the value dropped. We buy at auction and hold to maturity.
- If you hold until maturity why would you be concerned with losing value. Especially since it looks like rates are trending downward. I understand you’d be concerned if you planned to sell before maturity. Genuinely curious and learning about treasuries.
@@67NewEngland If you hold a treasury to maturity you will not lose value. I have learned that bond etf or mutual funds can lose value, unlike individual bonds. So I buy new issue t-bills from the government through my broker. A bond sold prior to maturity can either gain or lose value just like stocks or other investments, and I lose sleep when my portfolio loses value! I don't want to hold bonds that mature so far out that I might need the money sooner, because if they lost value I would be very unhappy. For me, bonds are for peace of mind and storage of value.
First of all, very sorry for the lost of your kitten, and consequent comment about holding life and loved ones close during these times of uncertainty. You have always come across as a thoughtful person who is just trying to help others in their financial journey. I appreciated this video about your not buying individual treasuries, while still adding to bond funds in your portfolio. I share your strategy. Thank you!
Your five reasons are all valid and compelling. I am in full agreement. I want 2% to be persuaded to let the government spend my money rather than me investing it elsewhere. That 2% is AFTER subtracting taxes on interest (no IRA/401k), and anticipated or potential inflation for the duration. For example, for one year, 2.5% inflation (?!) + 1% tax + 2% = 5.5% to make me part with my money, which is close to the current ballpark. But for any longer-dated treasurys, no deal. Taxes are going to increase, and the only way the massive federal debt will be paid, is by inflating it away. High inflation is here to stay. Do the calculation, and there is no sense in accepting current rates for anything over five years. I might consider TIPS, except the inflation calculation is highly suspect. Would like to have your thoughts. When considering money market funds, be sure to deduct expenses from the yield.
Use the 1981 CPI instead of the 2024 CPI to calculate your yield. Sure the “rate” of inflation if declining, however the rate the government reports is rigged. The price level on virtually everything is permanently baked into the cake upwards of 20%. Try to name anything that you buy that doesn’t cost 20% more than it did 2 years ago. Housing has increased 40%. The government is using inflation to pay its debt at the expense of Americans: (“There are a few reasons inflation makes it easier for a government to pay its debt, especially when inflation is higher than expected. In summary: Higher inflation increases nominal tax revenues (if prices are higher, the government will collect more VAT, workers pay more income tax) Higher inflation reduces the real value of debt, bondholders on fixed interest rates will see a fall in the real value of their bonds and it becomes easier for the government to pay back these bonds. Higher inflation can enable the government to freeze income tax thresholds so more workers pay higher tax rates - it becomes a way to increase tax revenues without increasing tax rates”).
For money market, mutual funds and ETFs there’s a tax statement provided by the fund management company disclosing for tax purposes what percent is US debt exempt from state and local taxes. I have to hunt for these forms every tax season.
I am sorry for your loss of your kitten and appreciate your tender thoughts of caring . Thank you for lighting the path to what is important in life, as well as knowledgeable investing.
In my Charles Schwab account it's very easy just to buy a one week or two week bond, and those are still paying over 5%. I don't see any reason just to stay in cash and earn zero interest, and I'm maxed out on gold. I've been doing some swing trades in various stocks, but I still have the bulk of my funds in very short duration bonds. I have one callable 20 year bond in the 6% range, but it's only 30K. If the Fed does pivot, which I expect at some point they will, capital appreciation will increase the value there, and if it's called, I still get the 6.25%. Either way it's a win situation. Just not willing to go to larger amounts on a callable bond though. I think you did a series a while back on callable bonds. Really appreciate the information and input! I am subscribed and like what you have to say and your insights. Keep up the great work!
all things being equal and putting aside future speculation on rates. Treasury Direct is an easy, competitive , and secure place to park and manage money. Much easier than CD's and less tempting to access than money market acct.s. It will be interesting to see which way the longer duration notes and bonds go, and when the yield curve flattens. Thank you for sharing your insight and ideas.
Money Market funds are not FDIC insured, only SIPC insured up to 500K. One reader pointed out Charles Schwab is having financial difficulties. That may not be material but something to think about.
Schwab is thinking about moving away from the banking business. They want to focus on the broker side of the business. They are still making money, just not as much. But it makes no difference to the customers, FDIC, SIPC, and additional protection provided by Schwab are more than enough, even if Schwab were to go bankrupt, you'll be fine.
Thank you for sharing your perspective on life. It is the most valuable of all our concerns. When you see how fragile it is, it is most precious. I am very sorry for the loss of your calico. We have one in our home and she is special joy and blessing to us. Your conscientious assessments and insightful thoughts on finance are always helpful and give added depth to my decisions. By the way, being retired the majority of my portfolio is in short term T Bills for the reasons you stated. If you haven't done a previous one, I would appreciate a video on the money market funds at Schwab.
Yup! Life is more important, STATE TAX hurts me. Stay state tax free! Already doing my estimated IRS payments, 401k treasury's are taboo due to tax implications, depending where you live of course! GREAT VIDEO!
Buying CD's and Treasuries around 4.5% or higher. They are growing in value as these rates go down. If rates go back up I can sell a few as I buy them in smaller increments 5k or so. I think right now things are too volatile market wise to go medium or long.
I live in New York a high tax state. So the fact that I don't have to pay state taxes on the interest from federal notes. bills, and bonds makes it worth it investing in federal funds.
I just created a 5 year treasury ladder at Schwab to lock in the current rates. My average is 4.5%. I think he’s already missed the peak at 6 months ago
I think the cat, is a good symbol, of what our attitude should be, towards investing. They're calm and move slowly, usually. But they are very observant, they wait for the right opportunity, to pounce. They have lighting fast reflux, as you would, seeing a good investment.
Steve Hanke says interest rates follow inflation, rates will come down soon and prices up. Says the 10/yr and longer dated treasuries are good trades. If the 10yr gets cut in half that should result in double-digit gain. Roughly I believe every 1% drop in yield results in 7% increase in price depending on place on curve. Curious what your thoughts are
I have not purchased treasuries for the capital gains. If one is looking for capital gains when the rates go down, I think that bond funds offer a better gain. Because of the effective duration of bond ETFs like TLT and EDV (both of which I own) one can see rather sharp appreciation of the ETF price. For instance a 1% decrease in the bond yields should correspond to a 16% increase in TLT and a 24% increase in EDV.
1. Isn't C.Schwab in trouble? 2. The sixth reason: J.D Vance wants to devaluate the USD in the next administration. It will needs extra-premiums for longer time Treasuries.
Perhaps Schwab is in trouble but money market funds are SIPC insured up to 500,000. Not sure J.D. Vance can “devalue the dollar.” Too many moving parts in that equation. The only certainty is the government has massive debt and interest payments now exceed defense spending. The Federal Reserve will need to continue to finance the government’s profligate deficit spending.
I can definitely see No. 2 as valid. One of Project 2025's priorities was to abolish the Federal Reserve and let the sitting President set interest rates directly himself. Small wonder that Trump, a former real estate agent, would favor zero interest rates. Easier to loot the Treasury for trillions when you don't have to worry about debt owed on interest, huh.
I’m very sorry for your loss. I have been watching your channel since my 18 year old son tragically drowned 3 years ago. When I learned that your son was away as a missionary I immediately knew I needed to subscribe to your channel, not only for the quality financial advice you’re providing but primarily because I can sense what kind of family I’m dealing with. What happened to me and my family initially shattered my perception of faith and sense of living but seeing good people like you tremendously helped in the grieving journey. I live in NY and because of high state and local taxes and because I’m 60 and nearing retirement I invest in US treasury bills to alleviate unnecessary risk worries. As you stated, this is only money, other things in life are more important… Thank you for the great work you and your son do. God Bless.
I admire your strength. There is a family that attends our congregation that also lost their son in a car accident about 3 years ago. I see how my friend has made it through but still has that loss inside and I suppose always will. It seems to be the price of love. God bless you. There are some parts of NY that I really enjoy. The finger lakes region is gorgeous. Not as fond of NYC (except the food there, love the food).
I'll go with the 6th reason and the one the bond market was sniffing out last week letting yields creep up. Pricing in a Trump victory and higher inflation.
I placed an order for a 2 yr. Note that hasn't been purchased yet. I was thinking of not getting it too. Can I stop that order on Treasury once I placed order? Thank you!
@@FatherNSonInvesting I looked closer at edv (I never heard of it before) and it seems to be better than tlt in a lot of ways- lower expense ratio, higher dividend, and slightly more volatile (which could be a bad thing). Do you think you could do a video comparing the 2 etfs?
The government is using inflation to pay it’s debt at the expense of Americans: “There are a few reasons inflation makes it easier for a government to pay its debt, especially when inflation is higher than expected. In summary: Higher inflation increases nominal tax revenues (if prices are higher, the government will collect more VAT, workers pay more income tax) Higher inflation reduces the real value of debt, bondholders on fixed interest rates will see a fall in the real value of their bonds and it becomes easier for the government to pay back these bonds. Higher inflation can enable the government to freeze income tax thresholds so more workers pay higher tax rates - it becomes a way to increase tax revenues without increasing tax rates.”
Yes what you describe is one way to try to manage the debt (borrow a lot of dollars at today's rates and inflate the currency when paying it back). Definitely a strategy if a government doesn't care about its citizens. I heard a great strategy by Warren Buffet to manage the debt/budget -- by passing a law that throws out ALL members of congress out every two years that the budget isn't balanced.
@@FatherNSonInvesting Sounds good to me. Much respect I have for Warren Buffett. But I'll bet Congress just shrugged it off like "yeah, right. No, seriously, what are some solutions?"🙄
Yes, Yes I am. But I need the other households who hold $2.7 Trillion in US debt to become vigilantes to force the yields up. thanks for watching and commenting.
@@johnrac3302 Most of these BRICS hawks I've seen online seem to be AI's and Puty's yes-men pushing this. Maybe some countries in Africa that for some reason sided with Russia and China.
Retired 63 yrs old. I am continuing as planned with t-bill ladders (3, 6, and 12 month durations). We're no longer in the building wealth stage, so we are more conservatively into keeping a good plan in motion, and trying to maintain simplicity. Definitely we are staying away from bonds longer term than 12 months as it would reduce liquidity and increase the stress if the value dropped. We buy at auction and hold to maturity.
- If you hold until maturity why would you be concerned with losing value. Especially since it looks like rates are trending downward. I understand you’d be concerned if you planned to sell before maturity. Genuinely curious and learning about treasuries.
@@67NewEngland If you hold a treasury to maturity you will not lose value. I have learned that bond etf or mutual funds can lose value, unlike individual bonds. So I buy new issue t-bills from the government through my broker. A bond sold prior to maturity can either gain or lose value just like stocks or other investments, and I lose sleep when my portfolio loses value! I don't want to hold bonds that mature so far out that I might need the money sooner, because if they lost value I would be very unhappy. For me, bonds are for peace of mind and storage of value.
First of all, very sorry for the lost of your kitten, and consequent comment about holding life and loved ones close during these times of uncertainty. You have always come across as a thoughtful person who is just trying to help others in their financial journey. I appreciated this video about your not buying individual treasuries, while still adding to bond funds in your portfolio. I share your strategy. Thank you!
Thank you! And thanks for watching!
Am I'm your camp Friend. Holding on to my cash in money market. 2025 long term yields should be higher. Too much debt.
Your five reasons are all valid and compelling. I am in full agreement.
I want 2% to be persuaded to let the government spend my money rather than me investing it elsewhere. That 2% is AFTER subtracting taxes on interest (no IRA/401k), and anticipated or potential inflation for the duration. For example, for one year, 2.5% inflation (?!) + 1% tax + 2% = 5.5% to make me part with my money, which is close to the current ballpark. But for any longer-dated treasurys, no deal. Taxes are going to increase, and the only way the massive federal debt will be paid, is by inflating it away. High inflation is here to stay. Do the calculation, and there is no sense in accepting current rates for anything over five years.
I might consider TIPS, except the inflation calculation is highly suspect. Would like to have your thoughts.
When considering money market funds, be sure to deduct expenses from the yield.
Use the 1981 CPI instead of the 2024 CPI to calculate your yield. Sure the “rate” of inflation if declining, however the rate the government reports is rigged. The price level on virtually everything is permanently baked into the cake upwards of 20%. Try to name anything that you buy that doesn’t cost 20% more than it did 2 years ago. Housing has increased 40%. The government is using inflation to pay its debt at the expense of Americans: (“There are a few reasons inflation makes it easier for a government to pay its debt, especially when inflation is higher than expected. In summary:
Higher inflation increases nominal tax revenues (if prices are higher, the government will collect more VAT, workers pay more income tax)
Higher inflation reduces the real value of debt, bondholders on fixed interest rates will see a fall in the real value of their bonds and it becomes easier for the government to pay back these bonds.
Higher inflation can enable the government to freeze income tax thresholds so more workers pay higher tax rates - it becomes a way to increase tax revenues without increasing tax rates”).
Your money market is taxed by federal and state. Treasury…. No state tax.
Not if you buy qualified “treasury only” MM
@@0x474B that is true. The correct MM will be exempt from state n local tax
For money market, mutual funds and ETFs there’s a tax statement provided by the fund management company disclosing for tax purposes what percent is US debt exempt from state and local taxes. I have to hunt for these forms every tax season.
I am sorry for your loss of your kitten and appreciate your tender thoughts of caring . Thank you for lighting the path to what is important in life, as well as knowledgeable investing.
Thank you and thanks for watching!
I just bought the 6 month getting 5.2%. Two reasons vs money market. No state tax and January 2025 maturity date pushes tax obligation into next year
In my Charles Schwab account it's very easy just to buy a one week or two week bond, and those are still paying over 5%. I don't see any reason just to stay in cash and earn zero interest, and I'm maxed out on gold. I've been doing some swing trades in various stocks, but I still have the bulk of my funds in very short duration bonds. I have one callable 20 year bond in the 6% range, but it's only 30K. If the Fed does pivot, which I expect at some point they will, capital appreciation will increase the value there, and if it's called, I still get the 6.25%. Either way it's a win situation. Just not willing to go to larger amounts on a callable bond though. I think you did a series a while back on callable bonds.
Really appreciate the information and input! I am subscribed and like what you have to say and your insights. Keep up the great work!
Stefani Pomboy reconmmended making treasuroes tax-free. She said that the reduction in interest paid would more than compensate the lost tax funds.
all things being equal and putting aside future speculation on rates. Treasury Direct is an easy, competitive , and secure place to park and manage money. Much easier than CD's and less tempting to access than money market acct.s. It will be interesting to see which way the longer duration notes and bonds go, and when the yield curve flattens. Thank you for sharing your insight and ideas.
Sorry about your kitty. They enhance our lives so sweetly, even is it's just for a short time.
The 13 and 17 went down this week. The 4 and 8 stayed the same.5.377 for an 8 week was tops this week.
I think you misspoke about the rate for 1-monthT Bill. You said it was 4.35 when chart shows it to be 5.35. Otherwise, you comments are helpful.
Oh, thanks for pointing that out! Yes, 5.35 is the right one.
So sorry about the loss of your cat. It's so hard to lose a furry family member. Good advice.
Thanks! Glad that the advice is helpful!
Money Market funds are not FDIC insured, only SIPC insured up to 500K. One reader pointed out Charles Schwab is having financial difficulties. That may not be material but something to think about.
Schwab is thinking about moving away from the banking business. They want to focus on the broker side of the business. They are still making money, just not as much. But it makes no difference to the customers, FDIC, SIPC, and additional protection provided by Schwab are more than enough, even if Schwab were to go bankrupt, you'll be fine.
Thank you for sharing your perspective on life. It is the most valuable of all our concerns. When you see how fragile it is, it is most precious. I am very sorry for the loss of your calico. We have one in our home and she is special joy and blessing to us. Your conscientious assessments and insightful thoughts on finance are always helpful and give added depth to my decisions. By the way, being retired the majority of my portfolio is in short term T Bills for the reasons you stated. If you haven't done a previous one, I would appreciate a video on the money market funds at Schwab.
Thank you! Stay tuned for a video on Schwab money market funds.
I’m so sorry for your lost 😢 I still miss my kitties that left me 7, 8 years ago.
Thank you and I am also sorry for your loss!
Hi. Just wondering if you can do an update on tlt? It seems it has corrected a lot. Are you buying?
Yup! Life is more important, STATE TAX hurts me. Stay state tax free! Already doing my estimated IRS payments, 401k treasury's are taboo due to tax implications, depending where you live of course! GREAT VIDEO!
Well said!
Buying CD's and Treasuries around 4.5% or higher. They are growing in value as these rates go down. If rates go back up I can sell a few as I buy them in smaller increments 5k or so. I think right now things are too volatile market wise to go medium or long.
I live in New York a high tax state. So the fact that I don't have to pay state taxes on the interest from federal notes. bills, and bonds makes it worth it investing in federal funds.
I totally understand. I think, as someone pointed out, that I am becoming a bond vigilante.
I will buy short term treasury due in September.Its better than what fidelity pays me .They pay 4.88 and takes mutual fund fee out
I just created a 5 year treasury ladder at Schwab to lock in the current rates. My average is 4.5%. I think he’s already missed the peak at 6 months ago
I think the cat, is a good symbol, of what our attitude should be, towards investing. They're calm and move slowly, usually. But they are very observant, they wait for the right opportunity, to pounce. They have lighting fast reflux, as you would, seeing a good investment.
Steve Hanke says interest rates follow inflation, rates will come down soon and prices up. Says the 10/yr and longer dated treasuries are good trades. If the 10yr gets cut in half that should result in double-digit gain. Roughly I believe every 1% drop in yield results in 7% increase in price depending on place on curve. Curious what your thoughts are
I have not purchased treasuries for the capital gains. If one is looking for capital gains when the rates go down, I think that bond funds offer a better gain. Because of the effective duration of bond ETFs like TLT and EDV (both of which I own) one can see rather sharp appreciation of the ETF price. For instance a 1% decrease in the bond yields should correspond to a 16% increase in TLT and a 24% increase in EDV.
Sorry for your loss, it's painful to lose a loving pet. ❤❤
Thank you! And thank you for watching!
So sorry for your loss. Been there and it is not fun.
Thank you!
Good morning. Thanks for your videos. They are so insightful and helpful. PS: I'm very sorry for the loss of your kitten.
Thanks for watching!
Does anyone know when the government Will start issuing more 10 year bonds and thus increase the yield?
Makes sense to wait until after the debt ceiling. RIP kitty cat.
1. Isn't C.Schwab in trouble?
2. The sixth reason: J.D Vance wants to devaluate the USD in the next administration. It will needs extra-premiums for longer time Treasuries.
Perhaps Schwab is in trouble but money market funds are SIPC insured up to 500,000. Not sure J.D. Vance can “devalue the dollar.” Too many moving parts in that equation. The only certainty is the government has massive debt and interest payments now exceed defense spending. The Federal Reserve will need to continue to finance the government’s profligate deficit spending.
I can definitely see No. 2 as valid. One of Project 2025's priorities was to abolish the Federal Reserve and let the sitting President set interest rates directly himself. Small wonder that Trump, a former real estate agent, would favor zero interest rates. Easier to loot the Treasury for trillions when you don't have to worry about debt owed on interest, huh.
I’m very sorry for your loss. I have been watching your channel since my 18 year old son tragically drowned 3 years ago. When I learned that your son was away as a missionary I immediately knew I needed to subscribe to your channel, not only for the quality financial advice you’re providing but primarily because I can sense what kind of family I’m dealing with. What happened to me and my family initially shattered my perception of faith and sense of living but seeing good people like you tremendously helped in the grieving journey.
I live in NY and because of high state and local taxes and because I’m 60 and nearing retirement I invest in US treasury bills to alleviate unnecessary risk worries. As you stated, this is only money, other things in life are more important…
Thank you for the great work you and your son do.
God Bless.
Well said!
I admire your strength. There is a family that attends our congregation that also lost their son in a car accident about 3 years ago. I see how my friend has made it through but still has that loss inside and I suppose always will. It seems to be the price of love. God bless you. There are some parts of NY that I really enjoy. The finger lakes region is gorgeous. Not as fond of NYC (except the food there, love the food).
Yes, things will never be the same. Thank you for your kind words.🙏
I'll go with the 6th reason and the one the bond market was sniffing out last week letting yields creep up. Pricing in a Trump victory and higher inflation.
1 million collecting 5+% is fine for me.
That would be fine for me too! Good job!
One months T Bills are paying 5.34%, better than the money market fund. So sorry for the loss of your cat.
I placed an order for a 2 yr. Note that hasn't been purchased yet. I was thinking of not getting it too. Can I stop that order on Treasury once I placed order? Thank you!
Never mind I found it. Was able to cancel. I'll put it in a 4wk and wait. Thank you!
How sad😢
It is! Thanks for watching!
So you are holding cash in Schwab fund? What is the ticker?
Thanks and I'm retired and enjoy your common sense videos
If you are not purchasing treasuries where is your money going?
Money market?
My cash savings is going to money market at 5.29%. Close enough to the 1 month T-bill rate for me.
Fidelity does not pay 5.29 plus take out mutual fund fee
@@FatherNSonInvestingdo you Jane to pay fee on that like mutual fund fee
Have *
@@Coco-yw9nfVanguard pays 5.29
Do you invest or look at TLT?
Yes. I have some TLT and EDV. They are a hedge for when the bond yields drop (prices go up).
@@FatherNSonInvesting I looked closer at edv (I never heard of it before) and it seems to be better than tlt in a lot of ways- lower expense ratio, higher dividend, and slightly more volatile (which could be a bad thing). Do you think you could do a video comparing the 2 etfs?
TLT is the only US debt based ETF with enough volume to trade options with, and highest volume for trading shares so it’s very liquid
Like to know what your think of recession 6 to 12 Months
The government is using inflation to pay it’s debt at the expense of Americans: “There are a few reasons inflation makes it easier for a government to pay its debt, especially when inflation is higher than expected. In summary:
Higher inflation increases nominal tax revenues (if prices are higher, the government will collect more VAT, workers pay more income tax)
Higher inflation reduces the real value of debt, bondholders on fixed interest rates will see a fall in the real value of their bonds and it becomes easier for the government to pay back these bonds.
Higher inflation can enable the government to freeze income tax thresholds so more workers pay higher tax rates - it becomes a way to increase tax revenues without increasing tax rates.”
Yes what you describe is one way to try to manage the debt (borrow a lot of dollars at today's rates and inflate the currency when paying it back). Definitely a strategy if a government doesn't care about its citizens. I heard a great strategy by Warren Buffet to manage the debt/budget -- by passing a law that throws out ALL members of congress out every two years that the budget isn't balanced.
@@FatherNSonInvesting Sounds good to me. Much respect I have for Warren Buffett. But I'll bet Congress just shrugged it off like "yeah, right. No, seriously, what are some solutions?"🙄
Or you DO buy short term notes because there is no state tax 😂
If your not buying treasuries , then what your going to keep your money in an uninsured money market!
You're now a bond vigilante!
Yes, Yes I am. But I need the other households who hold $2.7 Trillion in US debt to become vigilantes to force the yields up. thanks for watching and commenting.
sorry about your cat
Thanks!
many countries are dumping US dollars.
BRICS isn’t as together as all the UA-camrs are trying to make it seem.
@@johnrac3302 Most of these BRICS hawks I've seen online seem to be AI's and Puty's yes-men pushing this. Maybe some countries in Africa that for some reason sided with Russia and China.
TMF
Because interest rates will be lower after Trump gets elected