what about this vs the returns on a money market account? like buying SWVXX? when this video was released, it's annualized returns were also pretty close to 4.2%. what would be the benefits to going into SWVXX instead of SGOV (assuming the returns were pretty close)? are the returns on one vs the other give out on a different basis? great, quick, timely videos. i'm glad you jumped in and started putting out more info.
Thanks! A money market fund is using instruments similar to T-bills so I'd just compare fees, yield, ease of access, etc. Nothing to lose sleep over for a few bps.
Got it... recommended by a family member who is very savy, and is a professional investor. He actually moved a huge percentage of his money out of the stock market, and into SGOV. Of course, I am not recommending anything to anyone, but it sounded good to me, as my wife and I are very concerned about the stock market.
As for holding a large sum of cash for a house down payment, would I be better off investing in SGOV than a traditional HYSA (vio bank which yields me 4.17%)
John, you quoted annualized returns on T-Bills at 3.02% annualized....I am unclear if that includes the interest/yield payments on the Ts or if that is just the increase in value of the underlying? Thanks.
Technically no guarantee of a positive return. But the U.S. government has never defaulted on a debt obligation and we don't expect it to. A bond held to maturity will return its par value plus interest. SGOV's effective maturity is roughly 1 month. So all this to say T-bills are literally called the "risk-free asset" and are considered extremely safe, but I can't tell you it's impossible to lose money.
Splitting hairs on both. Just use weighted avg. maturity. You can see holdings and maturities here: www.ishares.com/us/products/314116/ishares-0-3-month-treasury-bond-etf
So if I invested 100k on 4 week maturity date t bill will its earn 4k? So since it works we buy at discount would we purchase a 96000 and it be 100k at maturity or do I have intrest relate confused
Yes, we'd usually expect T-bills to pay slightly more than money market funds. And yes, sometimes high income earners care solely about those state tax savings.
I know nothing about this ETF, nor do I understand how it works. When I look at a chart, it appears to begin at square one again and continue up to a high. So do earnings at the end of 30 days get paid and it reinvest at the beginning of next month again? Do I get kicked out at any point? Bottom line. Can i get in and "any time" and just leave it in there? Principal and earnings roll over and continue to earn and whatever yield? Doesn't matter when I sell? No good time/bad time to buy or sell? Thanks in advance. For context. I'm talking $400K-$500K or more.
Interest accrues throughout the month and then pays out at the end of each month, when price adjusts. You can buy and hold. No getting "kicked out." Doesn't matter when you buy or sell. In the interest of full disclosure, you might prefer a comparable option I covered recently, albeit much harder to understand: ua-cam.com/video/9Zyv8G_R-3g/v-deo.html
@@OptimizedPortfolio I bought last month on 4/17 at 110.529 at I'm showing .18% loss? Looking at a chart, it makes sense. But I bet I'm not getting a complete picture. It pays out at end of month? so Interest doesn't reinvest and principal remains? How does principal buy back at lower price at beginning of month? On a chart it seems like buy on the 1st and sell on the 31st is what should be done??? At this point, I'm waiting towards the end of month to sell and never to revisit SGOV again! LOL!
You're overthinking and misunderstanding it. Again, interest accrues during the month. Once it pays, price adjusts. You can reinvest that interest if you want via a setting with the broker. No need for timing, buying, selling, etc. There is zero advantage to buying on a particular day. Here's a simplistic, hypothetical example to illustrate. You buy on the 1st of the month at $100. Let's say it pays $1 at the end of the month on the 31st. Halfway through the month, price should be around $100.50. At the end of the month, you get paid $1 and share price drops back to $100. You now have $100 + $1 cash. You can keep and withdraw that $1 or reinvest it for a total position of $101. Repeat cycle. Look at the choppy price chart on this page to see this illustrated: etf.com/SGOV
@@Yahniboy Stocks and T-Bills are 2 completely different things for 2 completely different purposes. T--Bills are a short-term cash equivalent. Stocks are a long term investment. Relatively speaking, 5% is fantastic for T-bills right now. There have also been extended periods where T-bills beat the stock market. I explained this a bit in my video on T-Bills ETFs here: ua-cam.com/video/2V0dtUqHWXQ/v-deo.html
Thanks! Technically no guarantee of a positive return. But the U.S. government has never defaulted on a debt obligation and we don't expect it to. A bond held to maturity will return its par value plus interest. SGOV's effective maturity is roughly 1 month. So all this to say T-bills are literally called the "risk-free asset" and are considered extremely safe, but I can't tell you it's impossible to lose money.
I’m so confused about T bills. I bought a three month on vanguard. I gave them 30k they invested 29664. Did the rest go to my brokerage? So I got like “300 bucks in interest” but they just returned my 30k. WTF.
T bills are sold at a discount and return their par value at maturity. They do not pay interest. Yield is annualized. Always aim to understand what you're buying.
I don't think this is an investment. It is a good way to store money with some yield. I had GBIL which has a 3 month duration until recently. I own SCHO which has a longer duration tor my money storage.
@@OptimizedPortfolio Yes, overall it can, but I think of bonds the same way as my bank account. Neither will make me rich, but will allow me to sleep well at night.
@@daveschmarder-US1950 Depends on duration. Something like EDV for long bonds would definitely not be the same as a bank account and are more volatile than stocks. Anything longer than T bills would be very different from a plain savings account at a bank.
@@OptimizedPortfolio I have EDV and VGLT in my portfolio as speculative short term investments. I bought them in the last month or so and if the NAV declines, I'll nibble more. My speculation is that sometime the interest rates will go down as the Fed lightens up for one reason or another. This is not a big bet for me. Many of my investments are now held longer than a decade. BTW I enjoy your videos.
Sorry dude... I'm just getting into t-bills myself and am going directly to the source rather than paying any fees to anyone. Not even remotely interested. What's more, to whinge about ladders and whatnot is a bit lame. If you're gonna play the game, don't complain about the rules of it. Learn the rules and how to make them work *for* you instead of considering them obstacles to overcome. To anyone considering this "SGOV" thing, don't be a fool... Go directly to the source of the interest and cut out all the middlemen, all of them, it's a lot easier and more secure than obscure "ETF's" that advertise awesome returns.
To each their own, I suppose. Again, I'll gladly pay a few bps to have a ladder rolled for me rather than having to login regularly and do it myself. These "obscure" ETF "things" - of which your comment shows a profound lack of understanding - have billions of dollars of assets, so I suppose all those investors are "fools," too. Best of luck and thanks for watching!
@@OptimizedPortfolio I can appreciate that view to a certain extent, it's that I am a controlling minded person and whenever I can front run something to get ahead of others, then I will. The financial system in and of itself I find really difficult to trust. I know the Fed and is government is not going anywhere, so it's more logical to me to go directly to the source than to hook up with a group that has more say than I do with the allocation of my funds. Besides, I've greatly enjoyed navigating the TD website because I enjoy bucking the trend that believes it's too difficult to manage 😉
@@noydbwia Again though, this is a gross misrepresentation and misunderstanding of how ETFs work. If for some unlikely reason it fails, you still own the underlying securities. You're buying individual T-bills; SGOV simply holds a basket of those exact same T-bills. Neither method allows you to "get ahead" of the other. Blackrock - which happens to be the largest asset manager in the world - doesn't have any "say" with what SGOV holds; it tracks an index of T-bills. Simple as that. And I'm not sure anyone is claiming "it's too difficult to manage" a ladder of individual bonds, but rather that it's time consuming or they simply don't want to.
What do you think of T-bills and SGOV?
To park cash that might be needed in the next few months it seems like a no brainer.
Can you explain why the ETF climbs in price throughout the month and then after dividends are announced it drops.
@@couldbe8348 Share price adjusts for div payment as with any other security.
What happend with SGOV if the fed cut the rates? Only the Yield comes down or also the price (from 100$ to perhabs 98$)???thanks
@@pl95984 We'd expect price to stay roughly the same and yield to drop. Price may increase slightly temporarily.
Great stuff as always!
Thanks! :)
what about this vs the returns on a money market account? like buying SWVXX? when this video was released, it's annualized returns were also pretty close to 4.2%. what would be the benefits to going into SWVXX instead of SGOV (assuming the returns were pretty close)?
are the returns on one vs the other give out on a different basis?
great, quick, timely videos. i'm glad you jumped in and started putting out more info.
Thanks! A money market fund is using instruments similar to T-bills so I'd just compare fees, yield, ease of access, etc. Nothing to lose sleep over for a few bps.
Tbills don’t pay state income taxes… might be one relevant difference
so I am watching this video because Swvxx has .35 % fees and SGOV fee is less at .09%
@@pfd1972 money market funds that invest predominantly in T-bills also don't (e.g. SNSXX).
I ❤ it, easy option for storing cash in a volatile market.
Indeed
Got it... recommended by a family member who is very savy, and is a professional investor. He actually moved a huge percentage of his money out of the stock market, and into SGOV. Of course, I am not recommending anything to anyone, but it sounded good to me, as my wife and I are very concerned about the stock market.
Thanks for sharing, Joel!
As for holding a large sum of cash for a house down payment, would I be better off investing in SGOV than a traditional HYSA (vio bank which yields me 4.17%)
Impossible to say but I'd prob play it safe and stick with a plain HYSA.
Would you say this is a viable alternative to government money market funds(like SPAXX) for idle cash?
Yes
Thank you for the video! I see SGOV goes up and then resets each month. Is there a best day of the month to invest in it - beginning / end? Thank you.
Doesn't really matter but ideally before ex date. Thanks for watching!
@@OptimizedPortfolio Thank you!
The 1st or the 2nd of every month I buy shares and hold
And repeat again
@@joseortiz1633but then you don’t get the dividend
Are you supposed to buy and hold or just buy at the beginning of each month then sell at the end of each month?
John, you quoted annualized returns on T-Bills at 3.02% annualized....I am unclear if that includes the interest/yield payments on the Ts or if that is just the increase in value of the underlying? Thanks.
Total return. T-bills don't pay interest.
What are the tax implications? Can we use the profit/interest on this to negate any loses in other stock investments?
Like other US Treasury bonds, interest is federally taxable but free from state and local taxes. You can do what you wish with that interest.
so if i buy sgov, it cannot lose money but only gain according to current interest rates?
Technically no guarantee of a positive return. But the U.S. government has never defaulted on a debt obligation and we don't expect it to. A bond held to maturity will return its par value plus interest. SGOV's effective maturity is roughly 1 month. So all this to say T-bills are literally called the "risk-free asset" and are considered extremely safe, but I can't tell you it's impossible to lose money.
How does SGOV compare to US Treasury 3 Month Bill ETF (TBIL)?
Compared to SGOV, TBIL is newer, much less popular, more expensive, and has a longer duration.
Thanks! So, is BIL is closer comparison?
@@jfigarr Yes, though BIL is a bit shorter in duration than SGOV and is older, more popular, and more expensive.
Thanks for your response
I put in 5000k to start.
Thanks for the vídeo
Thanks for watching!
...5milions??? 5000k=5000000!
What is SGOV’s mix of 4-, 8-, and 13-week treasuries? Do they hold to maturity? Can’t seem to find that info.
Splitting hairs on both. Just use weighted avg. maturity. You can see holdings and maturities here: www.ishares.com/us/products/314116/ishares-0-3-month-treasury-bond-etf
So if I invested 100k on 4 week maturity date t bill will its earn 4k? So since it works we buy at discount would we purchase a 96000 and it be 100k at maturity or do I have intrest relate confused
No. Yield is annualized. Individual T bills don't pay interest. A T-bill ETF will because it's rolling them.
SGOV vs BIL?
BIL is a bit shorter in duration than SGOV and is older, more popular, and more expensive.
@@OptimizedPortfolio I'm right in the middle of my first month with Bil. Do you think it's worth changing?
@@QuadTap Only you can decide that.
www.optimizedportfolio.com/sgov-vs-bil/
The broker already pays interest on unused cash. Is SGOV paying more usually? If not is this even worth it to save the 4% state tax?
Yes, we'd usually expect T-bills to pay slightly more than money market funds. And yes, sometimes high income earners care solely about those state tax savings.
Is IB01 the same thing?
Not sure.
no is not, iB01 is the same as SHV but in Ireland. Currently SHV and iB01 have average duration of 0.27 years and SGOV 0.09 years
I know nothing about this ETF, nor do I understand how it works. When I look at a chart, it appears to begin at square one again and continue up to a high. So do earnings at the end of 30 days get paid and it reinvest at the beginning of next month again? Do I get kicked out at any point? Bottom line. Can i get in and "any time" and just leave it in there? Principal and earnings roll over and continue to earn and whatever yield? Doesn't matter when I sell? No good time/bad time to buy or sell? Thanks in advance. For context. I'm talking $400K-$500K or more.
Interest accrues throughout the month and then pays out at the end of each month, when price adjusts. You can buy and hold. No getting "kicked out." Doesn't matter when you buy or sell.
In the interest of full disclosure, you might prefer a comparable option I covered recently, albeit much harder to understand: ua-cam.com/video/9Zyv8G_R-3g/v-deo.html
@@OptimizedPortfolio I bought last month on 4/17 at 110.529 at I'm showing .18% loss? Looking at a chart, it makes sense. But I bet I'm not getting a complete picture. It pays out at end of month? so Interest doesn't reinvest and principal remains? How does principal buy back at lower price at beginning of month?
On a chart it seems like buy on the 1st and sell on the 31st is what should be done??? At this point, I'm waiting towards the end of month to sell and never to revisit SGOV again! LOL!
You're overthinking and misunderstanding it.
Again, interest accrues during the month. Once it pays, price adjusts. You can reinvest that interest if you want via a setting with the broker. No need for timing, buying, selling, etc. There is zero advantage to buying on a particular day.
Here's a simplistic, hypothetical example to illustrate. You buy on the 1st of the month at $100. Let's say it pays $1 at the end of the month on the 31st. Halfway through the month, price should be around $100.50. At the end of the month, you get paid $1 and share price drops back to $100. You now have $100 + $1 cash. You can keep and withdraw that $1 or reinvest it for a total position of $101. Repeat cycle.
Look at the choppy price chart on this page to see this illustrated: etf.com/SGOV
@@OptimizedPortfolio I really appreciate you taking the time to explain this. Thank you.
So if I invest 400,000 dllrs on SGOV how much would I earn at the end of month duration?
Assuming 5% SEC Yield, $400k * .05 / 12 = $1,667
@@OptimizedPortfolio thanks but I think that return is pretty terrible. I think I’ll stick with my stocks.
@@Yahniboy Stocks and T-Bills are 2 completely different things for 2 completely different purposes. T--Bills are a short-term cash equivalent. Stocks are a long term investment. Relatively speaking, 5% is fantastic for T-bills right now. There have also been extended periods where T-bills beat the stock market. I explained this a bit in my video on T-Bills ETFs here: ua-cam.com/video/2V0dtUqHWXQ/v-deo.html
Is SGOV state tax exempt?
Yes
Better than CLTL?
"Better" is subjective. CLTL is longer, less liquid, and more expensive. Depends what you're looking for.
So if I have $100k in sgov, I'll make $4k-$5k a month?
No. $4-5k per year. Yield is annualized.
@OptimizedPortfolio whack
Really like your video. Is it 100% loss-free to buy SGOV?
Thanks! Technically no guarantee of a positive return. But the U.S. government has never defaulted on a debt obligation and we don't expect it to. A bond held to maturity will return its par value plus interest. SGOV's effective maturity is roughly 1 month. So all this to say T-bills are literally called the "risk-free asset" and are considered extremely safe, but I can't tell you it's impossible to lose money.
Bought some sgov today. I'm in UK so will be exposed to exchange rate changes with usd.. But I'll take my chances..
Thanks for sharing!
I’m so confused about T bills. I bought a three month on vanguard. I gave them 30k they invested 29664. Did the rest go to my brokerage? So I got like “300 bucks in interest” but they just returned my 30k. WTF.
Your "interest" is the discount. That's around 4% or so return for a 3 month bill
T bills are sold at a discount and return their par value at maturity. They do not pay interest. Yield is annualized. Always aim to understand what you're buying.
I don't think this is an investment. It is a good way to store money with some yield. I had GBIL which has a 3 month duration until recently. I own SCHO which has a longer duration tor my money storage.
We can still call it an investment. There have been quite a few extended periods where T-bills beat the stock market.
@@OptimizedPortfolio Yes, overall it can, but I think of bonds the same way as my bank account. Neither will make me rich, but will allow me to sleep well at night.
@@daveschmarder-US1950 Depends on duration. Something like EDV for long bonds would definitely not be the same as a bank account and are more volatile than stocks. Anything longer than T bills would be very different from a plain savings account at a bank.
@@OptimizedPortfolio I have EDV and VGLT in my portfolio as speculative short term investments. I bought them in the last month or so and if the NAV declines, I'll nibble more.
My speculation is that sometime the interest rates will go down as the Fed lightens up for one reason or another.
This is not a big bet for me. Many of my investments are now held longer than a decade.
BTW I enjoy your videos.
Rodriguez Dorothy Thompson Thomas Thompson Melissa
Totally
Sorry dude... I'm just getting into t-bills myself and am going directly to the source rather than paying any fees to anyone. Not even remotely interested. What's more, to whinge about ladders and whatnot is a bit lame. If you're gonna play the game, don't complain about the rules of it. Learn the rules and how to make them work *for* you instead of considering them obstacles to overcome. To anyone considering this "SGOV" thing, don't be a fool... Go directly to the source of the interest and cut out all the middlemen, all of them, it's a lot easier and more secure than obscure "ETF's" that advertise awesome returns.
To each their own, I suppose. Again, I'll gladly pay a few bps to have a ladder rolled for me rather than having to login regularly and do it myself. These "obscure" ETF "things" - of which your comment shows a profound lack of understanding - have billions of dollars of assets, so I suppose all those investors are "fools," too. Best of luck and thanks for watching!
@@OptimizedPortfolio I can appreciate that view to a certain extent, it's that I am a controlling minded person and whenever I can front run something to get ahead of others, then I will. The financial system in and of itself I find really difficult to trust. I know the Fed and is government is not going anywhere, so it's more logical to me to go directly to the source than to hook up with a group that has more say than I do with the allocation of my funds. Besides, I've greatly enjoyed navigating the TD website because I enjoy bucking the trend that believes it's too difficult to manage 😉
@@noydbwia Again though, this is a gross misrepresentation and misunderstanding of how ETFs work. If for some unlikely reason it fails, you still own the underlying securities. You're buying individual T-bills; SGOV simply holds a basket of those exact same T-bills. Neither method allows you to "get ahead" of the other. Blackrock - which happens to be the largest asset manager in the world - doesn't have any "say" with what SGOV holds; it tracks an index of T-bills. Simple as that. And I'm not sure anyone is claiming "it's too difficult to manage" a ladder of individual bonds, but rather that it's time consuming or they simply don't want to.