How To Build A Treasury Bill Ladder In 2023 (T-BILLS OVER 4%!)
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- Опубліковано 20 чер 2024
- HOW TO BUILD A TREASURY BILL LADDER IN 2023 (T-BILLS OVER 4%!) | Are you looking for a low-risk investment strategy? A treasury bill ladder may be just what you need. In this video, I will share why savvy investors secretly buy US treasury bills to generate over 4% yield in a few months.
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0:00 - How to Build a Treasury Bill Ladder in 2023 (T-BILLS over 4%!)
0:35 - What are Treasury Bills?
1:48 - What is the estimated return on T-Bills?
3:12 - Should you buy and build a Treasury Bill ladder?
4:36 - How to build a Treasury Bill ladder?
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The One-Page Financial Plan by Carl Richards (easy read, holistic + fun graphics!) amzn.to/35NH54Z
Simple, Smart Investing by Ian Kennedy (can help you construct your investment portfolio)
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A Random Walk Down Wall Street by Burton G. Malkiel (classic book that sold me on index funds) amzn.to/2H7pbzS
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Skip Ahead Here!
0:00 - How to Build a Treasury Bill Ladder in 2023 (T-BILLS over 4%!)
0:35 - What are Treasury Bills?
1:48 - What is the estimated return on T-Bills?
3:12 - Should you buy and build a Treasury Bill ladder?
4:36 - How to build a Treasury Bill ladder?
First time viewer, recently started my ladder at the 8week & 13week for a starting value of 2500 & 7500, also with some added 13k of I-bonds from last year and paper bonds from taxes. Looking at longer term holds right now and hopefully can get about 100k invested before rates plummet. How often do you recommend re-investing? currently have mine set at max re-investments but will adjust accordingly
Thanks for the information!
Are you going to build a T-Bill ladder this year?
Very clear explanation. Thank you
Thank you for your kind comment. Have a great day!
Do you ladder now ie buy 100k for 6 months now then buy another now as well for 12 months for 100k instead of putting 200k in one only?
I am trying to understand when do i buy the ladders. Esp as I see interest rate coming down. So do it now or space it out. Maybe I am entirely clear on ladder concept. Thanks in advance.
Thanks for your question. Unfortunately we cannot give you specific investment advice. If you are interested in comprehensive financial planning, please schedule a call here - districtcapitalmanagement.com/schedule-call/
Thank you for the information. Do you know what the difference is in buying at auction rather than from your broker?
When it comes to purchasing Treasury bills (T-bills), there are two primary methods: buying at auction or buying from a broker. Here's an overview of the difference between these two approaches:
Buying at Auction:
Buying T-bills at auction involves participating directly in the U.S. Department of the Treasury's regularly scheduled auctions. These auctions are typically held on a weekly basis, and the Treasury sets the terms, including the maturity date and the discount rate or yield.
Here's how the process generally works:
- Auction Announcement: The Treasury announces the upcoming auction details, including the maturity dates and the auction date.
- Auction Participation: Investors, including individuals and institutions, can submit bids to purchase T-bills directly through non-competitive or competitive bidding.
- Non-Competitive Bidding: In non-competitive bidding, investors agree to accept the high yield determined at the auction.
- Competitive Bidding: In competitive bidding, investors specify the yield they are willing to accept, and the Treasury awards T-bills starting with the lowest yields until the auctioned amount is filled.
- Auction Results: Once the auction concludes, the Treasury announces the results, including the yields and the amount awarded to each bidder.
Settlement and Payment: If successful, you will be required to pay for the T-bills on the settlement date specified by the Treasury. The T-bills are typically held in book-entry form in your TreasuryDirect account or through a bank or brokerage account.
Buying from a Broker:
Buying T-bills from a broker involves purchasing them on the secondary market, where previously issued T-bills are bought and sold. Brokers can offer access to a wide range of Treasury securities, including T-bills, along with other investment options.
When buying from a broker:
- Selection and Pricing: Brokers provide a selection of T-bills with various maturities. The pricing may include a markup or commission, which is the cost associated with executing the transaction through the broker.
- Trade Execution: The broker facilitates the purchase of the T-bills on your behalf, executing the trade at the prevailing market price.
- Settlement and Payment: Once the transaction is completed, the T-bills are typically held in your brokerage account, and you will receive periodic interest payments until the maturity date when the principal is returned.
Key Differences:
- Auctions offer the opportunity to buy newly issued T-bills directly from the Treasury, while brokers provide access to a secondary market with a broader range of available securities.
- Auctions allow for competitive bidding, which may result in potentially lower yields if successful. Non-competitive bidding at auctions guarantees the highest yield determined at the auction.
- Buying from a broker may involve additional costs, such as markups or commissions, whereas auctions typically involve minimal or no transaction costs.
- Auctions provide the chance to purchase T-bills with specific maturity dates offered at that particular auction, while brokers offer flexibility in choosing T-bills from a wider range of maturities.
It's important to consider your investment goals, preferences, and available resources when deciding whether to participate in auctions or buy from a broker. Evaluating factors such as transaction costs, liquidity, and specific T-bill offerings can help determine the most suitable approach for your needs. Please consult with your financial advisor.