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TreasuryDirect Now Pays 30x More Than Your Bank Savings Account

Now get a MUCH higher return on your cash (for less risk)
Friday, May 18, 2018, 9:21 PM

Six months ago, I alerted readers to the very attractive benefits that the TreasuryDirect program offers to investors who are defensively sitting on cash right now.

Since then, those benefits have continued to improve. Substantially.

Back in November, by holding extremely conservative short-term (i.e., 6-months or less) Treasury bills, TreasuryDirect participants were receiving over 16x more in interest payments vs keeping their cash in a standard bank savings account.

Today, they're now receiving over 30 times more. Without having to worry about the risk of a bank "bail-in" or failure.

So if you're holding cash right now and NOT participating in the TreasuryDirect program, do yourself a favor and read on. If you're going to pass on this opportunity, at least make it an 'eyes-wide-open' decision.

Holding Cash (In Treasurys) Now Beats The Market

There are many prudent reasons to hold cash in today's dangerously overvalued financial markets, as we've frequently touted here at PeakProsperity.com.

Well, there's now one more good reason to add to the list: holding cash in short-term Treasurys is now meeting/beating the dividend returns offered by the stock market:

"Cash Is King" Again - 3-Month Bills Yield More Than Stocks (Zero Hedge)

'Reaching for yield' just got a lot easier...

For the first time since February 2008, three-month Treasury bills now have a yield advantage over the S&P 500 dividend yield (and dramatically lower risk).

Investors can earn a guaranteed 1.90% by holding the 3-month bills or a risky 1.89% holding the S&P 500...

The longest period of financial repression in history is coming to an end...

And it would appear TINA is dead as there is now an alternative.

And when you look at the total return (dividends + appreciation) of the market since the start of 2018, stocks have returned only marginally better than 3-month Treasurys. Plus, those scant few extra S&P points have come with a LOT more risk.

Why take it under such dangerously overvalued conditions?

If You Can't Beat 'Em, Join 'Em

In my June report Less Than Zero: How The Fed Killed Saving, I explained how the Federal Reserve's policy of holding interest rates at record lows has decimated savers. Those who simply want to park money somewhere "safe" can't do so without losing money in real terms.

To drive this point home: back in November, the average interest rate being offered in a US bank savings account was an insutling 0.06%. Six months later, nothing has changed:

(Source

That's virtually the same as getting paid 0%. But it's actually worse than that, because once you take inflation into account, the real return on your savings is markedly negative.

And to really get your blood boiling, note that the Federal Reserve has rasied the federal funds rate it pays banks from 1.16% in November to 1.69% in April. Banks are now making nearly 50% more money on the excess reserves they park at the Fed -- but are they passing any of that free profit along to their depositors? No....

This is why knowing about the TreasuryDirect program is so important. It's a way for individual investors savvy enough to understand the game being played to bend some of its rules to their favor and limit the damage they suffer.

Below is an updated version (using today's rates) of my recap of TreasuryDirect, which enables you to get over 30x more interest on your cash savings than your bank will pay you, with lower risk.

TreasuryDirect

For those not already familiar with it, TreasuryDirect is a service offered by the United States Department of the Treasury that allows individual investors to purchase Treasury securities such as T-Bills, notes and bonds directly from the U.S. government.

You purchase these Treasury securities by linking a TreasuryDirect account to your personal bank account. Once linked, you use your cash savings to purchase T-bills, etc from the US Treasury. When the Treasury securities you've purchased mature or are sold, the proceeds are deposited back into your bank account.

So why buy Treasuries rather than keep your cash savings in a bank? Two main reasons:

  • Much higher return: T-Bills are currently offering an annualized return rate between 1.66-2.04%. Notes and bonds, depending on their duration, are currently offering between 2.6% - 3.1%
  • Extremely low risk: Your bank can change the interest rate on your savings account at any time -- with Treasury bills, your rate of return is locked in at purchase. Funds in a bank are subject to risks such as a bank bail-in or the insolvency of the FDIC depositor protection program -- while at TreasuryDirect, your funds are being held with the US Treasury, the institution with the lowest default risk in the country for reasons I'll explain more in a moment.

Let's look at a quick example. If you parked $100,000 in the average bank savings account for a full year, you would earn $60 in interest. Let's compare this to the current lowest-yielding TreasuryDirect option: continuously rolling that same $100,000 into 4-week T-Bills for a year:

  1. Day 1: Funds are transferred from your bank account to TreasuryDirect to purchase $100,000 face value of 4-week T-Bills at auction yielding 1.68%
  2. Day 28: the T-Bills mature and the Treasury holds the full $100,000 proceeds in your TreasuryDirect account. Since you've set up the auto-reinvestment option, TreasuryDirect then purchases another $100,000 face value of 4-week T-Bills at the next auction.
  3. Days 29-364: the process repeats every 4 weeks
  4. Day 365: assuming the average yield for T-Bills remained at 1.68%, you will have received $1,680 in interest in total throughout the year from the US Treasury.

$1,680 vs $60. That's a 27x difference in return.

And the comparison only improves if you decide to purchase longer duration (13-week or 26-week) bills instead of the 4-week ones:

Repeating the above example for a year using 13-week bills would yield $1,925. Using 26-week bills would yield $2,085. A lot better (34x better!) than $60.

Opportunity Cost & Default Risk

So what are the downsides to using TreasuryDirect? There aren't many.

The biggest one is opportunity cost. While your money is being held in a T-Bill, it's tied up at the US Treasury. If you suddenly need access to those funds, you have to wait until the bill matures.

But T-Bill durations are short. 4 weeks is not a lot of time to have to wait. (If you think the probability is high you may to need to pull money out of savings sooner than that, you shouldn't be considering the TreasuryDirect program.)

Other than that, TreasuryDirect offers an appealing reduction in risk.

If your bank suddenly closes due to a failure, any funds invested in TreasuryDirect are not in your bank account, so are not subject to being confiscated in a bail-in. 

Instead, your money is held as a T-Bill, note or bond, which is essentially an obligation of the US Treasury to pay you in full for the face amount. The US Treasury is the single last entity in the country (and quite possibly, the world) that will ever default on its obligations. Why? Because Treasurys are the mechanism by which money is created in the US. Chapter 8 from The Crash Course explains: 

As a result, to preserve its ability to print the money it needs to function, the US government will bring its full force and backing to bear in order to ensure confidence in the market for Treasurys.

Meaning: the US government won't squelch on paying you back the money you lent it. If required, it will just print the money it needs to repay you.

So, How To Get Started?

Usage of TreasuryDirect is quite low among investors today. Many are unaware of the program. Others simply haven't tried it out.

And let's be real: it's crazy that we live in a world where a 1.68-2.09% return now qualifies as an exceptionally high yield on savings. A lot of folks just can't get motivated to take action by rates that low. But that doesn't mean that they shouldn't -- money left on the table is money forfeited.

So, if you're interested in learning more about the TreasuryDirect program, start by visiting their website. Like everything operated by the government, it's pretty 'no frills'; but their FAQ page addresses investors' most common questions.

Before you decide whether or not to fund an account there, be sure to discuss the decision with your professional financial advisor to make sure it fits well with your personal financial situation and goals. (If you're having difficulty finding a good one, consider scheduling a free discussion with PeakProsperity.com's endorsed financial advisor -- who has considerable experience managing TreasuryDirect purchases for many of its clients).

In Part 2: A Primer On How To Use TreasuryDirect, we lay out the step-by-step process for opening, funding and transacting within a TreasuryDirect account. We've created it to be a helpful resource for those self-directed individuals potentially interested in increasing their return on their cash savings in this manner.

Yes, we savers are getting completely abused by our government's policies. So there's some poetic justice in using the government's own financing instruments to slightly lessen the sting of the whip.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

NOTE: PeakProsperity.com does not have any business relationship with the TreasuryDirect program. Nor is anything in the article above to be taken as an offer of personal financial advice. As mentioned, discuss any decision to participate in TreasuryDirect with your professional financial advisor before taking action.

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27 Comments

David Huang's picture
David Huang
Status: Bronze Member (Offline)
Joined: Jan 20 2010
Posts: 76
It's been working great for me!

A while after your first post about this program I did set up an account.  So far it's worked out very well for me.  Thanks Adam so much for sharing this!

Thus far I've been staying with the 4 week T-bills as the money I started out using had been kept in my bank saving account as something of an emergency fund where I wanted ready access to it.  As my life is set up now I have a hard time imagining a situation where I couldn't wait 4 weeks at the most to get the money.  When I started actually using Treasury Direct for this savings I realized I could easily set it up so I wouldn't even have to wait 4 weeks in the worst case scenario.  I thought I'd pass this tip on to others here who might have similar concerns. 

There are auctions for the 4 week bills every single week.  So rather than putting everything in all at once where I'd then have to wait a full 4 weeks to get any access again I simply put in 1/4 every week for 4 weeks.  This way in a worst case scenario I never have to wait more than 7 days before at least some of the bills are maturing and accessible.

I still keep a very small amount in my regular bank savings account mostly to meet the minimums required to prevent monthly fees, but also should for some reason I can't even imagine I'd need truly immediate access.  Otherwise Treasury Direct has become my new "bank" for all excess cash not needed for expenses to be paid in the current month.  In my case I have been getting roughly 15 to 18 times the interest I would have gotten from my bank otherwise with, as you note, greater security.

finanindecia's picture
finanindecia
Status: Member (Offline)
Joined: Oct 22 2012
Posts: 6
» Follow Comments on this Article

When I click on "» Follow Comments on this Article", I get the following on a new page:

************************************************************************

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 <title>It&#039;s been working great for me!</title>
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 <description> &lt;p&gt;A while after your first post about this program I did set up an account.  So far it&#039;s worked out very well for me.  Thanks Adam so much for sharing this!&lt;/p&gt;
&lt;p&gt;Thus far I&#039;ve been staying with the 4 week T-bills as the money I started out using had been kept in my bank saving account as something of an emergency fund where I wanted ready access to it.  As my life is set up now I have a hard time imagining a situation where I couldn&#039;t wait 4 weeks at the most to get the money.  When I started actually using Treasury Direct for this savings I realized I could easily set it up so I wouldn&#039;t even have to wait 4 weeks in the worst case scenario.  I thought I&#039;d pass this tip on to others here who might have similar concerns. &lt;/p&gt;
&lt;p&gt;There are auctions for the 4 week bills every single week.  So rather than putting everything in all at once where I&#039;d then have to wait a full 4 weeks to get any access again I simply put in 1/4 every week for 4 weeks.  This way in a worst case scenario I never have to wait more than 7 days before at least some of the bills are maturing and accessible.&lt;/p&gt;
&lt;p&gt;I still keep a very small amount in my regular bank savings account mostly to meet the minimums required to prevent monthly fees, but also should for some reason I can&#039;t even imagine I&#039;d need truly immediate access.  Otherwise Treasury Direct has become my new &quot;bank&quot; for all excess cash not needed for expenses to be paid in the current month.  In my case I have been getting roughly 15 to 18 times the interest I would have gotten from my bank otherwise with, as you note, greater security.&lt;/p&gt;
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************************************************************************

How, then, do I follow the comments on this or any other article?

Thanks.

JairoVQ's picture
JairoVQ
Status: Member (Offline)
Joined: Dec 31 2017
Posts: 6
Do we have to pay Fed., State and City Taxes on the earnings?

Adam, thanks  for the article.  I'm planing to look into this .

Questions:

1) Since we are helping the Fed. Gov., do we still have to pay taxes on the earnings?

2) I've  read some posts that claim TreasuryDirect is cumbersome to use, bad tech. Support and a lot of paperwork and back and forth to complete transactions.

What is your experience on these issues?

Thanks,

Jairo

pat the rat's picture
pat the rat
Status: Silver Member (Offline)
Joined: Nov 1 2011
Posts: 120
penny

Great now I will get 30 pennies instead of one on five thousand dollars.

Adam Taggart's picture
Adam Taggart
Status: Peak Prosperity Co-founder (Offline)
Joined: May 26 2009
Posts: 3105
Tax-free at state & local level
JairoVQ wrote:

Questions:

1) Since we are helping the Fed. Gov., do we still have to pay taxes on the earnings?

2) I've  read some posts that claim TreasuryDirect is cumbersome to use, bad tech. Support and a lot of paperwork and back and forth to complete transactions.

Jairo --

1) Interest received on T-Bills is exempt from state and local taxes. It is fully taxed at the Federal level.

2) The TreasuryDirect website is clunky. Its interface definitely looks like it was designed by the government. But as mentioned, setting up an account and buying Treasurys is pretty straightforward. Our primer (Part 2) walks you through each step.

As for actual 'paper' paperwork? There is none. No 'back and forth' either when completing your transactions.

cheers,

A

Adam Taggart's picture
Adam Taggart
Status: Peak Prosperity Co-founder (Offline)
Joined: May 26 2009
Posts: 3105
Dollars, Not Pennies
pat the rat wrote:

Great now I will get 30 pennies instead of one on five thousand dollars.

Just to be accurate, Pat:

  • $5,000 in a bank savings account @ 0.06% = $3 in annual interest
  • $5,000 in 3-month T-bills @ 1.89% = $95 in annual interest

Yes, $95 still isn't a lot of money. But it's much better than $3.

 

And at higher scale, the difference becomes quite material:

  • $100,000 in a bank savings account @ 0.06% = $60 in annual interest
  • $100,000 in 3-month T-bills @ 1.89% = $1,890 in annual interest
LesPhelps's picture
LesPhelps
Status: Platinum Member (Offline)
Joined: Apr 30 2009
Posts: 800
The End of Financial Repression

Don't get me wrong.  I appreciate the article.  I've been investing for a few months now with treasurydirect.com.  Your article encouraged me to participate in a couple more of the upcoming auctions.

But it still feels like financial repression to me.  Until the real interest rate exceeds the real inflation rate, rather than the reported inflation rate, I still feel more that slightly repressed, financially.

I didn't even bother to look up the current definition for financial repression, but I'm guessing it involves interest rates below inflation rates, implying that there is a negative risk premium.

JohnH123's picture
JohnH123
Status: Bronze Member (Offline)
Joined: Apr 14 2010
Posts: 46
Buy T-bills in brokerage account

Hi Adam,

What are the pros/cons of buying T-bills through a brokerage account vs. Treasury Direct? 

gkcjrrt's picture
gkcjrrt
Status: Member (Offline)
Joined: Sep 20 2016
Posts: 13
Some Money Markets seem to track the 3month treasury yield

While potentially slightly more risky than treasury bills given the recent changes allowing the gating of money market funds, money market funds like vanguard prime have been tracking the yield of the 3 month treasury pretty well over the past couple of years.  Also, you can buy t-bills directly through vanguard and although I have not done that yet, it appears like it is similar to treasury direct.

https://personal.vanguard.com/us/funds/snapshot?FundId=0030&FundIntExt=I...

MKI's picture
MKI
Status: Bronze Member (Offline)
Joined: Jan 12 2009
Posts: 77
3 mo T bills yield advantage over S&P

 three-month Treasury bills now have a yield advantage over the S&P 500 dividend yield (and dramatically lower risk).

I'm not in agreement on the risk/reward equation here. Made a lot of money over the last decade with this position as well.

Selected, historically undervalued blue-chip stocks that have paid dividends for 25 years or more at 2.2%+ are my choice (I do always trim down if yield gets below 2.2%). Why? Due to the FED pumping, they are fairly low risk and done great in every crash to date (including 2008.

This investing method has far exceeded short-term Treasuries, every decade, since long before I was born. Why it makes sense: blue-chip companies own the government IMO. And the government can print at will. Just talk to helicopter Ben!

LesPhelps has it right:  Until the real interest rate exceeds the real inflation rate, rather than the reported inflation rate, I still feel more that slightly repressed, financially. Yep. Gone are the days when you can get a no-risk yield. The US government is actually less credible than blue-chip stocks that make money like EXX, and so the Fed has no choice but to pump the stock market (see 2008). If they run out of juice, Treasuries will be less valuable than wealth-producing stocks.

robbie's picture
robbie
Status: Silver Member (Offline)
Joined: Jul 16 2008
Posts: 100
No IRA money allowed

Would have been a nice option...

JairoVQ's picture
JairoVQ
Status: Member (Offline)
Joined: Dec 31 2017
Posts: 6
Thanks for the prompt response.

Jairo

Uncletommy's picture
Uncletommy
Status: Platinum Member (Offline)
Joined: May 4 2014
Posts: 588
Rising short-term rates; rising oil prices.

While I agree this stategy looks appealing and anybody with a pile of cash would be crazy not to take advantage of it, the bigger picture starts to look a little more scary. Short term investing maintains a certain level of liquidity, however, with nothing to control inflation, the real inflation rate will continue to gnaw away at investment and asset prices. Pile on increasing oil prices and you have the makings of  another recession. Adam is correct, though:

As a result, to preserve its ability to print the money it needs to function, the US government will bring its full force and backing to bear in order to ensure confidence in the market for Treasurys.

Meaning: the US government won't squelch on paying you back the money you lent it. If required, it will just print the money it needs to repay you.

Let us not ignore recent experiences of the QE injections or what Mr. Trump may trigger. It is reported that real estate prices in Canada are down by around 10%:

https://www.bloomberg.com/view/articles/2018-02-06/don-t-forget-what-causes-a-recession

When you start to dry up investment in productive assets, everyone takes a hit.

Uncletommy's picture
Uncletommy
Status: Platinum Member (Offline)
Joined: May 4 2014
Posts: 588
Postscript, Adam!

I don't know if you are in the elite top 1%, Adam, but those that are and have those piles of cash sitting around are probably parking their money waiting for asset prices to drop and picking up the bargains waiting to be had. With inflation waiting to surge again, the poor consuming schmucks will pay the price while those with the cash will pick up the bargains, thereby, contributing the the wage disparity the world is seeing. The elites are just doing what they've done for centuries. Their solution will be to put more people on the dole and/or increase surveilance those who object ( I reference the Daily Digest item on the LASER program in Los Angeles: https://theintercept.com/2018/05/11/predictive-policing-surveillance-los-angeles/

Eerily reminescent of something else:

LesPhelps's picture
LesPhelps
Status: Platinum Member (Offline)
Joined: Apr 30 2009
Posts: 800
robbie wrote: Would have
robbie wrote:

Would have been a nice option...

There is no restriction against having T-Bills within an IRA.  It’s simple, if you have a checkbook IRA.  As far as tax accounting for the transactions, I’ll find out next March.

ezlxq1949's picture
ezlxq1949
Status: Silver Member (Offline)
Joined: Apr 29 2009
Posts: 228
Bank nationalisation

Nothing like this in Australia. I think you should be counting your blessings. I think. I also suspect there's a gotcha lurking in there somewhere. Can't spot it, but.

You know, take this far enough and do it carefully enough, and maybe the US Treasury could in effect nationalise the private banks. Would that be a good or a bad thing? No idea.

MKI's picture
MKI
Status: Bronze Member (Offline)
Joined: Jan 12 2009
Posts: 77
Treasuries

I've owned every type of Treasury since Treasury Direct started way back when, and just have a warning: make sure you keep your TIPS in an IRA because the taxes suck to do. Google it if you doubt me.

I hate Treasuries, but couldn't resist buying over the last 20 years because deflation has made them more profitable than stocks often. But now we are over that hump and are moving into inflation territory again, the only Treasuries I even consider are TIPS or bills.

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1449
MKI wrote: I've owned every
MKI wrote:

I've owned every type of Treasury since Treasury Direct started way back when, and just have a warning: make sure you keep your TIPS in an IRA because the taxes suck to do. Google it if you doubt me.

I hate Treasuries, but couldn't resist buying over the last 20 years because deflation has made them more profitable than stocks often. But now we are over that hump and are moving into inflation territory again, the only Treasuries I even consider are TIPS or bills.

 

Or stay on the short-short end and rollover to get new increased interest rate.  

MKI's picture
MKI
Status: Bronze Member (Offline)
Joined: Jan 12 2009
Posts: 77
Or stay on the short-short end

Sure, that's what I meant by bills. But as Les pointed out, they really don't even meet true inflation rates...

Palloy2's picture
Palloy2
Status: Member (Offline)
Joined: May 19 2018
Posts: 3
"Extremely low risk"

I was surprised to see this plan being promoted as "Extremely low risk" because the US Treasury wouldn't want to default on its bonds.  It seems to me there is an extremely high risk of Treasury being put in a position of defaulting, because no one wants to lend it any more money, and the Fed can't print any more.

The most urgent problem is North Korea.  They may not have an accurate ICBM-nuke, but they likely do have something that will EMP the entire east coast of USA, leaving the Government with no TV, radio, internet and phone system, and no money-printing machines.  Trump-Bolton-Pompeo-Haley don't show any signs of understanding that "denuclearise the Korean peninsula" means the US denuclearising too.  Even if they did, would Kim require anything less than no US warships within DPRK's exclusive economic zone and no B-52s flying over the peninsula?  How anyone can imagine a staged, verifiable denuclearisation, ("you do these steps and we will those steps")  being agreed to when the same type of agreement has been impossible to achieve with Soviet Union-Russia over 69 years?  Trump has been pretty clear about what will follow if agreement cannot be reached.  It's not a low risk of happening, it is a high risk.

While the interest rate might be higher than for a bank account, it is still less than inflation, so what is good about it compared to keeping physical gold buried in the garden?

 

 

 

 

Arjen's picture
Arjen
Status: Member (Offline)
Joined: Mar 11 2010
Posts: 3
Peer to peer

I wish people would put their money more where their morals are. I disagree with a lot the feds are doing, so I would never choose to put my money into treasury bills. Yes, sometimes sticking to your morals is losing out on money; nothing new there. But in this case there are actually other options for parking your surplus money, like Peer to peer investing. The nice thing about that is that your money is actually doing something good, because you cut the banks out of the equation, which is always a good thing to do. Plus the return (with Prosper) is on average around 7-8%. And you can even set up an IRA account with them and roll over your existing IRA's.

JohnH123's picture
JohnH123
Status: Bronze Member (Offline)
Joined: Apr 14 2010
Posts: 46
Peer to peer risk

Arjen,

Prosper sounds very intriguing. My concern is that if the markets do tank as Chris & Adam have been forecasting, a lot of borrowers on Prosper could default on their loans. 

BCBeek's picture
BCBeek
Status: Member (Offline)
Joined: Apr 19 2011
Posts: 3
TD is a great tool and I

TD is a great tool and I appreciate PP running the articles on it.

 

One thing to keep in mind is that there is no fraud protection on an account. The terms of service (https://www.treasurydirect.gov/terms.htm) item 5 specifically state that you are responsible for "all activities that occur under any account or password that you maintain for electronic commerce with Treasury or Fiscal Service". 

 

So if your access credentials are hacked from your computer, you're not protected. Some banks do offer fraud protection. Having said that, hackers getting money out of TD with your access credentials would be more difficult than say your bank account. 

 

Speaking of which, I’d love to see PP do a podcast/article on advanced digital security - diving deeper than the “don’t use your dog’s name as your banking passwords.” that you see on other sites. For instance, there’s an uptick of illegal phone number porting by hackers in order to get past two factor authentication. Something to keep in mind if your cell phone unexpectedly loses service. With data breaches like equifax, many of the puzzle peices to access individual accounts are in unauthorized hands. 

Eannao's picture
Eannao
Status: Silver Member (Offline)
Joined: Feb 28 2015
Posts: 150
Online Banks offer good interest

Adam,

Online banks such as Discover Bank and Ally offer good interest rates on Savings accounts (e.g. 1.6% for Ally). These accounts are instant access and are FDIC insured. 

I know Treasury Direct offers very slightly higher rates than this, but are there any other advantages to TD that you can think of (for amounts less than $250k)? In your article you mention bail-in risk, but are these even legal in the US? If so, what would happen to your money when TD return it to your bank account? Would it also be bailed in?

Many thanks, E.

newsbuoy's picture
newsbuoy
Status: Gold Member (Offline)
Joined: Dec 10 2013
Posts: 259
Brokerage Accounts FDIC vs SIPC?

The obvious question here, does your brokerage do it for free?

And I would add a question: is cash in a brokerage (sweep) account insured by the SIPC more of less secure than FDIC?

aball1035's picture
aball1035
Status: Member (Offline)
Joined: Dec 19 2014
Posts: 12
Reinvesting the 4 Week Bond

Why wouldn't reinvesting the 4 week bond get you 1.68% over and over again?

Adam Taggart's picture
Adam Taggart
Status: Peak Prosperity Co-founder (Offline)
Joined: May 26 2009
Posts: 3105
Because of the market
aball1035 wrote:

Why wouldn't reinvesting the 4 week bond get you 1.68% over and over again?

First off, just to state the obvious, the 1.68% is an *annualized* return. So you're only getting 1/13th of that return over each 4-week period.

Second, each new batch of 4-week T-bills are sold to the market in regular auctions. The demand from the market at an auction sets the return for the bills sold at that auction.

If the buyers that week are extra-eager to own T-bills, they'll pay more for them, thus lowering the % yield. Similarly, yields will be higher in the auctions when buyers are less eager.

Yields on 4-week Treasurys have been rising steadily over the past 2 years, as buyers have wanted to get paid more (i.e. they're "less eager") to hold T-bills:

Now, to your question:

Yes, you'll get a 1.68% return for the year if you invest in 4-week T-bills and re-invest the proceeds at every auction if yields remain exactly where they are for the year.

Of course, yields change at every auction. So, if they rise from here, you'll get a higher annual return with that strategy. And a lower return if they fall from here.

But 1.68% sure beats the heck out of the 0.06% the average bank is offering on a savings account. And with the trajectory of T-bill yields over the past year, it sure looks like yields want to continue climbing.

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