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Yield curve is pretty inverted, 4-week t-bill is at 2.36% while the 10-year bond is at 2.07%. Makes sense to me if you want US Treasuries. You can do a little better with a CD though.
If you are feeling a little unsure of the process I would recommend doing a "test run". Set up your first purchase. The minimum investment is $100. The money will not come out of your account immediately, it will be on the next purchase date which could be a week away. The government will take like $99.xx from your bank account (whatever the current interest rate is) and then 4 weeks later they will deposit exactly $100. Congratulations, you just made money loaning money to the government. Once you are comfortable the most common sense way to invest is to invest 25% of what you want to invest each week for four weeks. You will have to go into your account and set it to reinvest if you want to leave your money there. I haven't purchased T-bills in awhile so I can't explain how to navigate the web site, just be sure you buying 4 week bills and not something with a longer maturity unless that's what you want to do.
"why choose T-bills over a similar-yielding money market?" The money market account is essentially doing the same thing with your money and your bank skimming some of your profits. If you invest the money yourself directly with the treasury nobody is skimming off your money so your yield is higher.
No state taxes on a t-bill either, so the effective yield after taxes is some fraction better in the end.
I like the chance of liquidity every 4 weeks (or every week with a 4 week ladder), and the safety. I have newly tried this myself, found it easy and useful. I am parking some money there that I might need later in the year, that I did not want to lock up in a longer term CD. My bank is only offering 0.02% for a 4 week CD.
Speaking for me, it is because money becomes available every 4 weeks. And because of that we can subject more of our cash to the 2.4% rate.
We can get a slightly better rate with a CD, but that makes the money unavailable. Using Money Market and T Bill combination, we keep about an 80/20 balance, with the greater portion in T Bills. If I used CD's I would be more inclined to use 60/40.
My net pay goes into my checking account. Retirement plan contributions are pre-tax deductions. So what goes into my checking, IS what I spend each month.
We use both. But we only get 1% on the money market. T Bills pay 2.4%, or thereabouts. The T Bill account is linked to the money market account, so that's where monthly interest appears.
Why? There's a whole slew of places you can get 2-2.5%
Goldman Sucks and Ally just lowered the % amount they are paying. If that is not a big broadcast that the FED is going to lower rates I don't know what is.
i use fidelity ultra short bond fund and fidelity limited term bond fund as opposed to 4 week treasuries . The yield tends to hang around longer and there are capital gains to be had as rates fall
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