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I checked the TreasuryDirect.gov website about the 4 week T-bills, but am having trouble understanding it. Thanks for the person that recommended me looking into it. So I have a few questions, the first is: what part do I read about and learn how to invest in the 4 week T-bills? I will ask my bank about them, but wonder other than that if I have to go through a brokerage to buy them?
Other than state tax exemption why choose T-bills over a similar-yielding money market? Seems a hassle for a slightly higher interest rate on a presumably small amount of capital.
I checked the TreasuryDirect.gov website about the 4 week T-bills, but am having trouble understanding it. Thanks for the person that recommended me looking into it. So I have a few questions, the first is: what part do I read about and learn how to invest in the 4 week T-bills? I will ask my bank about them, but wonder other than that if I have to go through a brokerage to buy them?
Open an account at Treasury Direct. It's free and easy.
They will link your bank account or money market account (checking or savings) so that money can be transferred easily.
Then just buy $1000 worth of 4 week T Bills. They pay about 2.4% annually.
They will take something like $998.15 out of your account, and then 4 weeks later they will put $1000.00 back into it. So the difference (1000.00 - 998.15), $1.85, is your interest, or profit.
You will be offered the option of automatically reinvesting every 4 weeks. If you do that - and we do - then Treasury Direct will deposit your interest every 4 weeks.
In the above example, you would get $1.85 13 times a year - every 4 weeks. 13 times $1.85 is $24.05, so that's your 2.4% interest.
Last edited by Listener2307; 06-29-2019 at 07:20 AM..
Other than state tax exemption why choose T-bills over a similar-yielding money market? Seems a hassle for a slightly higher interest rate on a presumably small amount of capital.
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.
All our earned income goes into the money market account. The money market account feeds our checking accounts, and that's where our monthly allowance comes from. We have used this system for many, many years.
FWIW: I have come to believe that putting your earned income into your checking account is a mistake. The only money in your checking account should be what you intend to spend that month, and no more.
It's all kinda cool, I think.
When someone starts talking about how much money the government pays to support its debt, I can say, "Yeah! They're paying ME!"
Open an account at Treasury Direct. It's free and easy.
They will link your bank account or money market account (checking or savings) so that money can be transferred easily.
Then just buy $1000 worth of 4 week T Bills. They pay about 2.4% annually.
They will take something like $998.15 out of your account, and then 4 weeks later they will put $1000.00 back into it. So the difference (1000.00 - 998.15), $1.85, is your interest, or profit.
You will be offered the option of automatically reinvesting every 4 weeks. If you do that - and we do - then Treasury Direct will deposit your interest every 4 weeks.
In the above example, you would get $1.85 13 times a year - every 4 weeks. 13 times $1.85 is $24.05, so that's your 2.4% interest.
So, as usual, I don't understand. So I open an account with Treasury Direct. Then I buy, for example, $1,000 worth of 4 week T bills. Now, as far as reinvesting: can I just leave the $1,000 there at TD and not add more money to the account? Is there someone at TD I can talk to?
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.
All our earned income goes into the money market account. The money market account feeds our checking accounts, and that's where our monthly allowance comes from. We have used this system for many, many years.
FWIW: I have come to believe that putting your earned income into your checking account is a mistake. The only money in your checking account should be what you intend to spend that month, and no more.
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.
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