When you purchase a CD on Merrill make sure you note the trade execution date before pulling the trigger. I purchased a $100k CD that took 8 days to execute. Learned my lesson!
I wasnt financial free until my 40’s and I’m still in my 40’s, bought my second house already, earn on a monthly through passive income and got 4 out of 5 goals, just hope it encourages someone that it doesn’t matter if you don’t have any of them right now, you can start TODAY regardless your age INVEST and change your future! Investing is a grand choice I made. Great video! Thanks for sharing! Very inspiring! I love this.
@@eadad4371 Generally, investing requires higher knowledge. For this reason, It's important to have a solid support structure (financial consultant) to guide you through especially in asset picking. I operate with (Regina Louise Collaro) an investment advisor who partners with a licensed wealth management firm. For the record, the experience has been the best for my finance.She is quite popular for her services so you might have heard of her. She made me financially stable investing through her help, now I earn on a monthly basis through her passive income strategy...So I’ll advise you do get a good Investment advisor for yourself
@@davidforesto That’s great , your investment advisor must be really good,I have seen testimonies of people using the help of investment advisors in making them more financial stable. Do you mind sharing more info on this person?
@@eadad4371 look her up on the internet and leave her a message she's quite popular for her services as she was recently featured on cnn. She can work with anyone irrespective of where their located
@@marktil. I have had the intentions of starting investing. But I always thought it was late and I think I need to stop procrastinating. I will definitely 🔍 Regina Louise Collaro and see what she can advise .Thanks a lot . This was of so much help to me .
Thanks for this video - this was EXACTLY what I needed. My self directed CD expired last month and I forgot how to choose a CD and how to execute the trade. Much appreciated. Locked in a 5.45%
Great info. I agree that Merrill Edge is slow to process transactions. I find the app itself is slow as well. Sometimes it take the app 15-20 seconds to process a trade and the price changes before I can confirm…🤷🏻♂️
Oh absolutely! The user interface is a tad clunky and slower than the other brokers. But the Preferred Rewards Program is still a draw for me (at least right now)!
CD laddering is one of the smartest moves I made in diversifying my investments. 📈💰 By strategically spreading my investments across multiple CDs with varying maturities, I've not only safeguarded my capital but also enjoyed consistent returns.I wasn't financially free until my 40s, and I'm still in my 40s. I've bought my second house, earn on a monthly basis through passive income, and achieved 4 out of 5 goals. Investments are a wise decision I made
Gotta say Eric , Merrill Edge and been a TERRIBLE experience. I signed up for this special and got the 2 credit cards with Bank of America. The whole process was very time consuming , which I reasoned was ok as I was going to earn the rewards. I tired to reach someone on the phone at Merrill and spent 4 hours on hold listening to the same line of music for 4 hours. I was a wreck and had to give up, as I needed to go to work and not be constantly listening for someone to answer. . I wanted my large deposit to be sitting in an interest bearing account ( as it does at Vanguard.3.65 % ) before I made my cd purchase. To do this you must talk to someone. You can not do this yourself on line, however it is impossible to reach a person . I have given up . I bought a short term cd and will cancel account and cards as soon as I have met the criteria for the rewards. Vanguard is excellent . You do not stay on hold.They call you back and are kind and professional. My advice to anyone do NOT open an account with Merrill Edge unless you really enjoy self flagellation. At least it has made me very, very appreciative of Vanguard.
Great question, Ed! For this video, CDs refer to certificates of deposits that are purchased via a broker (in this case, Merrill Edge). You can also buy brokered CDs through Fidelity, Schwab, and more!
I opened a Merrill Edge account, but it is impossible to find out what your interest rate is . Maybe you could do a video on how to find your interest rate .ty
I know treasuries are state tax exempt. How do taxes work when purchasing on the secondary market? In your example you buy for $95,686 and then get 100k at maturity. Is that capital gains?
Good question, Omar! Bonds like treasuries are taxed in 2 ways: 1) income that's distributed and 2) any gains if the investment is sold at a profit. For #1, any interest income (e.g. coupons) are not subject to state or local income taxes. For #2a, if you bought the treasury when it was issued at its original issue price and hold until maturity, you generally will not have capital gains (or losses). Therefore, you generally won't pay any capital gains taxes. This scenario generally applies to buying newly issued treasuries. However for #2b, since we're dealing with the secondary market, it's also possible to buy securities at a discount to their revised issue price. In this scenario, you could have small capital gains taxes or losses. I'm not a tax professional so I can't speak with absolute certainty (and I could be wrong, too). For the video example, I was buying a newly issued T-Bill. From past experiences, I'd expect the vast majority of the return to be exempt from state and local taxes. A very small portion (if not zero) would have a tax treatment as capital gains/losses.
Great question, Yiming! A brokered CD should be redeemed automatically on the maturity date. All of the cash should be deposited straight into your cash sweep program and be available as spending power. There's no auto-roll feature that I know of, so you'll have to manually select your next CD.
Edge Web interface is confusing. Must first withdraw from preferred deposit (CMA) before buying a brokered cd but it is impossible to follow the process. No interest after withdrawal until CD is purchased. Available CDs can be several days out. Cumbersome process.
It’s definitely not my favorite brokerage platform (I’d put Charles Schwab and Fidelity much higher). Sorry to hear you had a particularly bad experience with it though. 😢
Great question and sorry for the late reply! The easiest way is to do so online: 1. On the upper tabs of Merrill Edge, hover over "Research." 2. Select "Mutual Funds" under the subsection titled "Investments & Screeners." 3. On this page, there is another navigation menu directly underneath the main one. This is underneath the "Mutual Funds" and includes various tabs. Select "Cash Management Solutions." Note: you may need to expand the menu if your device is very small. 4. Here, you'll see a lot of various mutual funds offered by companies like Blackrock and Fidelity. To find Bank of America's Preferred Deposit program, you'll have to scroll all the way down to the bottom of the page. 5. There, you'll find the "Preferred Deposit" and "Preferred Deposit for Business Program." Click on "Deposit." 6. Finally, you'll be able to make your initial deposit. Please note the initial deposit must be at least $100,000. Any subsequent transactions can be made with as little as $1,000. Hope that answers your question!
Noted & thanks for the feedback! To sell, the easiest way to do so is to click on the specific holding and select "Trade." There should be options to sell the security during market hours as necessary.
Investing in current secondary notes with lower price but little interest means higher longer capital gains when bonds are sold? Which is more tax efficient? New issued notes or secondary notes? If I buy secondary notes, my income might be jacked up for the long term capital gains to be sold at once..so I might have to purchase limited amount of notes to not exceed the threshold as 83351 to pay 0 dollar on long term capital gains. Comparily, if I buy new notes with high interest rates,I might be paying tax for every single earned interest out of my tax bracket. Hence, I think buying secondary notes would be more tax efficient because the tax for long term capital gains are much less than paying ordinary tax for coupon interest
Good question, Will! Bonds like treasuries are taxed in 2 ways: 1) income that's distributed and 2) any gains if the investment is sold at a profit. For #1, any interest income (e.g. coupons) are not subject to state or local income taxes. For #2a, if you bought the treasury when it was issued at its original issue price and hold until maturity, you generally will not have capital gains (or losses). Therefore, you generally won't pay any capital gains taxes. This scenario generally applies to buying newly issued treasuries. However for #2b, since we're dealing with the secondary market, it's also possible to buy securities at a discount to their revised issue price as you mentioned. In this scenario, you could have small capital gains taxes or losses. I'm not a tax professional so I can't speak with absolute certainty (and I could be wrong, too). But generally speaking, the differences are very minimal between newly issued and secondary market treasuries. Happy to give an example for further clarification if needed though!
Outstanding video, Eric! BMO Harris (there's a branch in my town) is offering 4.5% on a 59-month CD. That's the highest in this area for brick and mortar financial places.
hi Eric, I will like to know more about rolling 401k traditional to a fix index annuity, I do not know much about investing, can you please put them on simple terms that I can understand? thank you
Sure thing! I would recommend talking with a financial advisor, particularly if they are the same company that holds your 401(k). They may be able to expedite and smooth out the transfer process and tell you if doing so will incur any additional fees. The following are just my personal thoughts and should not be construed as advice. After all, I’m not a professional! Fixed index annuities can offer steady retirement income payments that are based on an underlying stock market index (e.g. S&P 500 or NASDAQ). They generally provide some downside protection which limits loss of principal. However, that downside protection does come at a cost. Your potential gains are also limited, and you can observe that by looking at the “Participation Rate” of the annuity in question. Some are fully invested in the market, but others may only be 50% invested. Therefore, a fixed index annuity has its potential gains and losses capped. Although annuities seem appealing for its guaranteed income during retirement, there are a number of risks to consider. Namely, annuities often charge higher management fees, have surrender charges, and can pose a risk of principal loss upon death. There’s a lot of fine print you want to read through because the expenses can quickly add up. Investopedia has a great article on it as well: www.investopedia.com/articles/retirement/02/031302.asp The average annuity tends to charge about 2 to 3% annually in administrative and management fees, which is incredibly high. To put that in perspective, a Vanguard Target Retirement Fund (e.g. VTWNX) has an overall expense ratio of just 0.08% and automatically provides reallocation of a diversified portfolio of stocks and bonds. If we’re talking about a six figure portfolio, that is thousands of dollars in savings each year on management fees alone with a standard Target Retirement Fund. Annuities can also charge commissions and surrender charges if you withdraw money early, which can cut down on your income as well. If you unfortunately pass away early, the annuity company may end up keeping the remainder of your savings. Many annuities do offer the ability to transfer the remainder to beneficiaries, but they often charge an additional premium. A lot of insurance companies also note the tax benefits of annuities, but it’s worth mentioning that a traditional 401(k) is already tax-sheltered. Overall, I’ve been pretty negative towards annuities but I’d say for good reasons. It can work in niche situations where you want some market exposure with less risk. However, most qualified financial advisors wouldn’t say annuities are for everyone, especially if it’s a 401(k) which already has incredible tax benefits. Most investors also just use a standard Target Retirement Fund because it achieves much of the same goals at a fraction of the cost. Plus, you could manage your money within the same brokerage platform without worrying about potential rollover taxes. If you’re still interested in rolling over a 401(k) into an annuity, again I’d suggest talking with an advisor at your 401(k) broker so you can do a direct rollover. That way, you don’t risk forfeiting 20% of your balance and your process is as smooth as possible.
Any idea if identical [CUSIP] & [maturity date], for t-bills and/or brokered cd's, would have same yield-to-worst same across Merrill Edge and other popular platforms (Schwab, Vanguard, Morgan Stanley/Etrade, etc)? It seems as costs are nearly zero for unassisted trades, so I would like to pick a platform where [t-bill, cd] ] arbitrage is near zero? Also, is transferring cash between a BofA savings && Merrill Edge (linked accounts?), instantaneous or are we subjected to hours or days of delay? I was not sure I fully understood this point, early in the video? Thanks,
Great question, Picano! Because all full-service platforms operate on the secondary market, the yield-to-worst should *theoretically* be the same across all platforms. For Treasuries, I would say that yields are virtually identical. Brokered CDs are a little different where some brokers may offer more variety than others. I've noticed that Fidelity and Charles Schwab tend to offer the greatest number of banks which can be very helpful for longer term CDs. So while Bank A's CD would offer the same yield across two platforms, Fidelity and Schwab may offer a Bank B that offers a higher yield. Merrill Edge does not trade Bank B, so their customers won't see these potentially better products. For CDs with durations of 1 year or less, the differences are pretty minimal (often 0 - 25 basis points). However, for 18 to 60 month CDs, the differences can be larger. The opposite could be true where Merrill Edge offers better/unique banks than Fidelity & Schwab, but I haven't seen that occur in the last 6 months. For your last point, transfers between linked Bank of America and Merrill Edge accounts should be instantaneous/occur in real time. Hope that helps!
Great question! CDs are initially sold at Face Value. So if I purchase $10,000 worth of CDs, my initial deposit is $10,000, and I will receive $10,000 + $X interest back on maturity date. On the other hand, Treasuries are sold at a discount, so the initial deposit would be < $10,000 with exactly $10,000 returned on maturity date. Merrill Edge uses the same tools to describe both types of investments, so that’s how the offer prices differ!
I buy cds on Merrill. By the quantity box it says maximum trade value. My amount there is double my cash i have in the account. Does that mean i can buy the maximum trade value as my quantity? Thank you for your help.
Great question! The "Maximum Trade Value" indicates the maximum amount of money offered at the advertised "Yield to Worst" rate. For example, let's say I have $100,000 I'd like to use to buy a 5.5% yielding Treasury Bill with an "Maximum Trade Value" of $75,000. If I want to put all of my money in that specific T-Bill, I would have $75,000 earning a 5.5% yield. The remaining $25,000 would receive a different (and lower) yield of 5.25% as a hypothetical.
Unfortunately, I don't think there's an easy way to filter T-Bills between newer issues and secondary market offers. Generally speaking though, the vast majority of T-Bills/Notes/Bonds that you find under the "Fixed Income" page will be secondary market offers (there's no fees for secondary market treasuries).
They can both be sold before maturity date. There is no difference in risk between the two when it comes to T-Bills and most brokers don't charge any fees. When it comes to New Issued vs. Secondary Market CDs though, there is often a transaction fee charged by your brokerage firm ($1 per $1,000 CD for secondary market CDs).
How do I know from buying new brokered CD, where it indicates the APY interest is locked for a full CD term to earn full APY? Is selecting "Fixed income" indicated for a full term without early withdrawal?
Happy to clarify, and I hope I understood your question correctly! The "Yield" is the expected annualized return if you hold the CD until maturity date. So if you see a 4.5% yield on a 2-year noncallable CD, you should expect to see 4.5% APY/interest earned each year. A noncallable CD has a locked or "fixed" interest rate. A callable CD is one that can be changed at will by the issuing bank. If they agreed to pay you 4.7% but overall interest rates fall to 3%, they may call back the CD; you are still paid back your principal plus any accrued interest, but you won't be earning 4.7% anymore. Shorter term Brokered CDs (1 year or less) often pay their interest all on maturity date. You can find this by selecting the specific security and searching for coupon frequency. Longer term or callable CDs often choose to pay their interest monthly, semiannually, or every single year. I should note though that the compounding effect of monthly vs yearly interest payments is largely negligible because it has already been factored into the yield calculations. Yields for fixed income assets all reflect the rate of return assuming that you hold until maturity date. Hope that further explains things but feel free to let me know if you have any other questions!
Great question! Unfortunately, I don't think you can automatically rollover short term Treasuries on Merrill Edge like other brokers do. You'd have to manually buy another T-Bill when the previous one matures.
Hi,Eric. On Merrill, there is a coupon rate for some of the Treasury bills. Do I have to add up the coupon rate? Or do I only have to pay attention to the Yield to the worst? Is coupon rate already included in the yield to worst?
Sorry for the delayed response, Will! Yes, the coupon rate is already included in the "Yield to Worst" (YTW). You can use YTW to calculate your annualized total yield on an investment. The coupon rate provides the annualized interest payments on a security. This is primarily useful for people who need the regular income. For example, say there's a T-Bond yielding 4% might pay 2% through coupons every month. If you're retired and you want those regular payments to meet your bills, focusing on the coupons and coupon frequency is a good option. For short-term savers though, YTW tends to be much more important. You may care less about the interest rate payments but more on the overall APY/return.
@@EricTangOfficial thank you so much for your reply. Now I already have a better understanding of purchasing Treasury bills and I have placed my order for 3 months bills. I plan to convert bills to notes after they expire, but notes have a couple rate and discounted price. Could you help me to figure out how to calculate the annual yield? Couple rate: 2.50% Maturity date: 5/15/2024 Offer price: 97.366 Ytw: 4.546%. Couple frequency: semi -annually Could you help me with the math for the annual yield? And if I spend 100,000 for this notes, do I get $2500 coupon annually since the couple rate is 2.5% And plus 4 months more after a year, 2500 × 1/3= 833, so after it matures, I will get a total. Couple of 3333. And after it matures, I also get a return for the discounted par amount, which is 2634. (3333+2634)/97366= 6.1% total return 6.1÷16 ×12= 4.575... wow it seems I got it right
Merrill only sells secondary Treasury securities online, I saw 5 years bonds with very low like 0.71% coupon rate but with a good discounted price. Like you said, most people prefer to have a higher couple rate to receive fixed income for spending. If the new issued 5 years bonds from Treasury direct would have higher yield? And if the new issued bonds are always sold at 100 par amount and full yields ?
Eric, since I am unable to contact Merrill Edge by phone, perhaps you know the answer. Can I buy brokered CD in a Merrill Edge IRA brokerage account? Thanks for the video. I'm pretty sure the answer is no. Thanks.
Good question, David! Merrill Edge IRA Brokerage Accounts do allow you to purchase Brokered CDs. You can find them under the "Fixed Income" section under the "Research" Tab.
@@EricTangOfficial Thanks for responding Eric. I looked under the research tab but I am still unable to navigate to anything that resembles "Brokered CDs". Doesn't mean they're not there, just that I can't find it. I guess I will end up waiting on hold with Merrill. I will report back what they say. Thanks again.
Unfortunately, Merrill doesn't list/update the Brokered CDs or Treasury rates after market hours. In other words, no information is provided during the weekends. I'd recommend checking the site again on Monday morning and you should be able to see all of the updated yields. Hope that answers your concerns!
Eric, You were correct. Merrill Edge does allow the purchase of Brokered CDs inside their IRA accounts. I called today and they will make CD transactions free of charge by phone as well. Their Phone App is NOT set up to allow Brokered CD trades which is why I couldn't see a way to do it previously. You have to use the web site to purchase CDs without calling according to the rep.. At least for an IRA account. Not sure if it's the same for regular PMA accounts or not. Thanks for your help.
Good question! The "Offer Price" tells you how much money you will deposit today to earn back $100 on maturity date. When it comes to Treasuries, this "Offer Price" is discounted (e.g. 99.000). In other words, I might pay $990 today to earn back $1,000 in a few months. The yield comes from the difference between the two values ($10 profit) When it comes to Brokered CD's, this "Offer Price" is always 100 face value because your interest in paid on top of the principal. In other words, I might pay $1,000 today and get back $1,050 on the maturity date.
Great question! Unfortunately, as of December 2023, Merrill Edge doesn't allow you to purchase fixed income products just yet. Hope they change it in the future!
ARE CD really safe in Merrill edge investment online? BASSICALLY DO YOU GET MONEY PLUS INTEREST THEY SAY? Why i got 100dollars charge per CD i bought ? Can you explain..thank you
I have 4 accounts at Merrill and over the past year any time day or night you call them the wait time is much too long - between 15 min and 30 min which feels wrong for such a firm. I will most likely be moving my accounts this year to another firm due to this reason. shame on Merrill. Dan
I was on hold with them for 2 hours yesterday and finally gave up. The number on the app says they are available 24/7. I don't believe that's true. Plus there is at least a 2 minute automated intro when you call with information that doesn't apply to my question and it cannot be bypassed. Then it says you can expect extended hold times. Based on my phone experience with them recently, Merrill Edge does not want your business.
I'm interested in buying a 3 month treasury bill. When i google the rate for a 3 month t-bill it shows 4.59%. However, when I use Merrill's Fixed Income Screener for Treasuries, and filter for 0 - 1 year. There is only 1 entry, and its YTW is only 1.794%. Why can't i find a 3 month t-bill on Merrill?
Good question, Michael! Unfortunately, Merrill makes it unnecessarily difficult to search by durations. The easiest way I've found is to select for Treasury Bills maturing in 1 year or less. On the maturity date column, sort by ascending order. In other words, for maturity dates closest to the present at the top. You'll have to scroll down (or expand results per page) to find a treasury security 3 months from today. One of the most recent Treasury Bills (912797FD4) maturing 5/9/2023 is yielding 4.6% APY for example!
A rough approximation goes like this: $1,000 * 4.75% * (3 months / 12 months) = $11.875. You'd earn about $11.875 in "interest" when the T-Bill expires in 3 months. The calculation is actually a little bit different when it comes to treasuries. You're actually buying a $1,000 government bond today at a discount. In other words, you can imagine paying $988.13 to the government today and receiving $1,000 3 months later.
@@EricTangOfficial some people say the rate will reach the peak between March and May this year. What is the best time to buy bonds this year, do you think? I am thinking about investing in either 2 or 3 years of Treasury notes. Would the yield go above 5% for notes?
I'm preparing another video on this very topic, but personally I think that rates will essentially plateau in 2023. I don't think yields will rise significantly from today's current prices. I don't personally believe that notes will go above 5% (in the short term) since they've largely plateau'ed at 4.5% ever since late October in spite of interest rate hikes.
@@EricTangOfficial that is true, the fed funds rate will stay high for a whole year according to Federal Reserve. We will have good chances to lock our bonds at a good rate this year. However, I feel like the CPI will not go down easily, let us see what the CPI will be on 01/12/2023 tomorrow Thursday.
Great question! The examples in this video revolve around secondary market Treasuries & CDs. These are not newly issued ones. However, you can indeed buy newly issued CDs on Merrill Edge with the same procedure.
@@EricTangOfficial Thanks for the prompt response and clarification on this. I'll try the process again and see if I can find the "new" issues. On Schwab it literally says "new", but I don't see that on Merrill Edge, unless it shows up somewhere else.
@@EricTangOfficial So I called them this morning...apparently you can only buy new issues t bills over the phone and to place the trade it's $29 ... lame!
Merrill Edge can offer Treasuries with a maturity date of as little as 1 week. The rates might not be as competitive since they're trading on the secondary market but there could be several options!
Thanks so much! Unfortunately, Merrill Edge typically only shows updated rates during market hours. CDs and Treasuries don't trade over the weekend so Merrill Edge doesn't show rates. You'll have to check in on Monday!
What's your portfolio allocation? Considering that you're so young, how much of a focus do you put on fixed income investing? I'm 35 myself so I have a 30 year investment time horizon, so I'm focused on stacking VOO and the likes. I have a bit of CDs to continue my savings and pay down my mortgage, but I'm still heavily invested in equity
Great question! The vast majority of my portfolio is held in passive index funds with a handful of individual stocks like Apple and Costco. A small portion is in brokered CD's and treasuries, but my biggest positions are still invested in the market.
Good question! I haven't found the setting for that, but new issues is generally applicable for brokered CD's, not treasuries. Most (if not all) brokers charge no fees on treasury purchases, including auction and secondary trades. So whether you buy a newly auctioned T-Bill or an expiring soon T-Bond, there are often $0 fees.
Hi, Eric. Treasury bills look lots of different on Merrill. Currently I am looking at bills that mature at 03-09-2023, the offer price is 99.2581,it says the yield to worst is 4.263%,but how come? (100-99.2581)/ 99.2581 is only 0.7%. I used the math from another video as: [(100-99.2581)÷90(days)×365] / 99.2581, I still can't come out with this rate.. 😭 help Does the yield to worst determines the final rate we can get for the investment? So if the rate is 4.263% for 3 months , then we just divide this by 4 to get the return for 3 months? So confusing
Sure thing! I believe the time between today (January 3rd) and March 9th is closer to about 60 days (about 2 months). So assuming that your calculation of the total return is 0.7%, you would estimate that the annualized yield is about 0.7% x (12 months / 2 months) = ~ 4.2%. This is pretty close to what Merrill Edge is calculating as the 4.263%. Ours is an approximation while theirs takes into account a 365 day yield. The yield to worst determines the final annualized rate of return on the investment. In other words, assuming you don't sell before maturity date, this is the rate of return assuming you continually reinvested at the same rate for an entire year.
Hi,Eric. Please help me again with the one year T-notes which will mature on 04/30/2024.The accured interest costs 1094.73. Price :97.4844 Coupon rate: 2.25% Quantity:103000 Frequency: semi-annually Yield to worst:4.787 Estimated principal amount:100408.91. The coupon will be paid for 1158.75 in April 2023 and October 2023(shown on merill). Question 1: The first coupon paid on April 2023 includes the accured interest paid to the seller. Do i pay tax for that accured interest since it is included in the first coupon payment paid to me? Question 2: how do I calculate interest accumulated between Octor 2023 and the mature date 04/30/2024 and how do I get paid for that? Or if I will miss the coupon for that period. Question 3: it seems like I paid extra for this purchase because of the accured interest, will I be paid back for that ? Or it is already included in the first coupon payment in April 2023? Question 4: how do I come to the yield to worst shown above? [1158.75×2 +( 103000-100408)] ÷ 100408= 4.88% it is pretty close to the YTW, but it seems like total coupon include accured interest ,if I deduct the accured interest, the return would be much less...
When you purchase a CD on Merrill make sure you note the trade execution date before pulling the trigger. I purchased a $100k CD that took 8 days to execute. Learned my lesson!
Great to note of! Thanks for the warning!
I wasnt financial free until my 40’s and I’m still in my 40’s, bought my second house already, earn on a monthly through passive income and got 4 out of 5 goals, just hope it encourages someone that it doesn’t matter if you don’t have any of them right now, you can start TODAY regardless your age INVEST and change your future! Investing is a grand choice I made. Great video! Thanks for sharing!
Very inspiring! I love this.
Gr8. How come?
@@eadad4371 Generally, investing requires higher knowledge. For this reason, It's important to have a solid support structure (financial consultant) to guide you through especially in asset picking. I operate with (Regina Louise Collaro) an investment advisor who partners with a licensed wealth management firm. For the record, the experience has been the best for my finance.She is quite popular for her services so you might have heard of her.
She made me financially stable investing through her help, now I earn on a monthly basis through her passive income strategy...So I’ll advise you do get a good Investment advisor for yourself
@@davidforesto That’s great , your investment advisor must be really good,I have seen testimonies of people using the help of investment advisors in making them more financial stable. Do you mind sharing more info on this person?
@@eadad4371 look her up on the internet and leave her a message she's quite popular for her services as she was recently featured on cnn. She can work with anyone irrespective of where their located
@@marktil. I have had the intentions of starting investing. But I always thought it was late and I think I need to stop procrastinating. I will definitely 🔍 Regina Louise Collaro and see what she can advise .Thanks a lot . This was of so much help to me .
Thanks for this video - this was EXACTLY what I needed. My self directed CD expired last month and I forgot how to choose a CD and how to execute the trade. Much appreciated. Locked in a 5.45%
Very nicely done! 5.45% is certainly an attractive yield!
Dude, you did a great job and doing this step by step. Thanks so much for taking the time to share with us.
Thanks so much! Glad it was useful!!
Thank you! This was great information. Made a trade on edge for a 1 yr CD at 5.25 apr. yesterday. Happy I did now. 👍
Awesome to hear that! Glad you're getting a good rate
Great info. I agree that Merrill Edge is slow to process transactions. I find the app itself is slow as well. Sometimes it take the app 15-20 seconds to process a trade and the price changes before I can confirm…🤷🏻♂️
Oh absolutely! The user interface is a tad clunky and slower than the other brokers. But the Preferred Rewards Program is still a draw for me (at least right now)!
CD laddering is one of the smartest moves I made in diversifying my investments. 📈💰 By strategically spreading my investments across multiple CDs with varying maturities, I've not only safeguarded my capital but also enjoyed consistent returns.I wasn't financially free until my 40s, and I'm still in my 40s. I've bought my second house, earn on a monthly basis through passive income, and achieved 4 out of 5 goals. Investments are a wise decision I made
Glad to see that your strategy has paid off! Well done!
Your video was concise, informative, and easy to understand. Thanks!
Thanks so much! Love the profile pic!
Excellent job; what about stocks with Merrill?
Subbed, very clear and transparent! Good job!
Are CD's cancellable before the settlement date with Merrill Edge? How to do it?
Gotta say Eric , Merrill Edge and been a TERRIBLE experience. I signed up for this special and got the 2 credit cards with Bank of America. The whole process was very time consuming , which I reasoned was ok as I was going to earn the rewards. I tired to reach someone on the phone at Merrill and spent 4 hours on hold listening to the same line of music for 4 hours. I was a wreck and had to give up, as I needed to go to work and not be constantly listening for someone to answer. . I wanted my large deposit to be sitting in an interest bearing account ( as it does at Vanguard.3.65 % ) before I made my cd purchase. To do this you must talk to someone. You can not do this yourself on line, however it is impossible to reach a person . I have given up . I bought a short term cd and will cancel account and cards as soon as I have met the criteria for the rewards. Vanguard is excellent . You do not stay on hold.They call you back and are kind and professional. My advice to anyone do NOT open an account with Merrill Edge unless you really enjoy self flagellation. At least it has made me very, very appreciative of Vanguard.
Sorry to hear you had such a bad experience with Merrill Edge & Bank of America! That sounds like a horrible customer experience. Duly noted.
Hello can you explain what do you mean buying cds ?? For investment what kind of cds are you talking about thank you
Great question, Ed! For this video, CDs refer to certificates of deposits that are purchased via a broker (in this case, Merrill Edge). You can also buy brokered CDs through Fidelity, Schwab, and more!
I opened a Merrill Edge account, but it is impossible to find out what your interest rate is .
Maybe you could do a video on how to find your interest rate .ty
Sure thing, Neal!
I know treasuries are state tax exempt. How do taxes work when purchasing on the secondary market? In your example you buy for $95,686 and then get 100k at maturity. Is that capital gains?
Good question, Omar! Bonds like treasuries are taxed in 2 ways: 1) income that's distributed and 2) any gains if the investment is sold at a profit.
For #1, any interest income (e.g. coupons) are not subject to state or local income taxes.
For #2a, if you bought the treasury when it was issued at its original issue price and hold until maturity, you generally will not have capital gains (or losses). Therefore, you generally won't pay any capital gains taxes. This scenario generally applies to buying newly issued treasuries.
However for #2b, since we're dealing with the secondary market, it's also possible to buy securities at a discount to their revised issue price. In this scenario, you could have small capital gains taxes or losses.
I'm not a tax professional so I can't speak with absolute certainty (and I could be wrong, too). For the video example, I was buying a newly issued T-Bill. From past experiences, I'd expect the vast majority of the return to be exempt from state and local taxes. A very small portion (if not zero) would have a tax treatment as capital gains/losses.
Great video thank you. What happens once the T Bill matures. Does it just turn into cash in your account or do you have to do something?
Great question! When the Treasury Bill matures, it should be redeemed automatically into cash in your brokerage account.
@@EricTangOfficial thank you so much. I bought one to give it a try.
How do you redeem a brokered CD at maturity? Does it redeem automatically or is it reinvested into a CD for the next term?
Great question, Yiming! A brokered CD should be redeemed automatically on the maturity date. All of the cash should be deposited straight into your cash sweep program and be available as spending power. There's no auto-roll feature that I know of, so you'll have to manually select your next CD.
Edge Web interface is confusing. Must first withdraw from preferred deposit (CMA) before buying a brokered cd but it is impossible to follow the process. No interest after withdrawal until CD is purchased. Available CDs can be several days out. Cumbersome process.
It’s definitely not my favorite brokerage platform (I’d put Charles Schwab and Fidelity much higher). Sorry to hear you had a particularly bad experience with it though. 😢
Great video. Do you know how to deposit funds into the cash management solution preferred deposit from Merrill Edge account?
Great question and sorry for the late reply! The easiest way is to do so online:
1. On the upper tabs of Merrill Edge, hover over "Research."
2. Select "Mutual Funds" under the subsection titled "Investments & Screeners."
3. On this page, there is another navigation menu directly underneath the main one. This is underneath the "Mutual Funds" and includes various tabs. Select "Cash Management Solutions." Note: you may need to expand the menu if your device is very small.
4. Here, you'll see a lot of various mutual funds offered by companies like Blackrock and Fidelity. To find Bank of America's Preferred Deposit program, you'll have to scroll all the way down to the bottom of the page.
5. There, you'll find the "Preferred Deposit" and "Preferred Deposit for Business Program." Click on "Deposit."
6. Finally, you'll be able to make your initial deposit. Please note the initial deposit must be at least $100,000. Any subsequent transactions can be made with as little as $1,000.
Hope that answers your question!
Would have been good to talk a little bit about selling before maturity. The web site lists only offers, not bids, but there must be a way to sell.
Noted & thanks for the feedback! To sell, the easiest way to do so is to click on the specific holding and select "Trade." There should be options to sell the security during market hours as necessary.
great video! thank you!
Glad it was helpful!!
Investing in current secondary notes with lower price but little interest means higher longer capital gains when bonds are sold? Which is more tax efficient? New issued notes or secondary notes?
If I buy secondary notes, my income might be jacked up for the long term capital gains to be sold at once..so I might have to purchase limited amount of notes to not exceed the threshold as 83351 to pay 0 dollar on long term capital gains.
Comparily, if I buy new notes with high interest rates,I might be paying tax for every single earned interest out of my tax bracket.
Hence, I think buying secondary notes would be more tax efficient because the tax for long term capital gains are much less than paying ordinary tax for coupon interest
Good question, Will! Bonds like treasuries are taxed in 2 ways: 1) income that's distributed and 2) any gains if the investment is sold at a profit.
For #1, any interest income (e.g. coupons) are not subject to state or local income taxes.
For #2a, if you bought the treasury when it was issued at its original issue price and hold until maturity, you generally will not have capital gains (or losses). Therefore, you generally won't pay any capital gains taxes. This scenario generally applies to buying newly issued treasuries.
However for #2b, since we're dealing with the secondary market, it's also possible to buy securities at a discount to their revised issue price as you mentioned. In this scenario, you could have small capital gains taxes or losses.
I'm not a tax professional so I can't speak with absolute certainty (and I could be wrong, too). But generally speaking, the differences are very minimal between newly issued and secondary market treasuries. Happy to give an example for further clarification if needed though!
Outstanding video, Eric! BMO Harris (there's a branch in my town) is offering 4.5% on a 59-month CD. That's the highest in this area for brick and mortar financial places.
Nice one, Doc! What a solid rate for 5 years, especially as you said for a brick and mortar bank!
hi Eric, I will like to know more about rolling 401k traditional to a fix index annuity, I do not know much about investing, can you please put them on simple terms that I can understand? thank you
Sure thing! I would recommend talking with a financial advisor, particularly if they are the same company that holds your 401(k). They may be able to expedite and smooth out the transfer process and tell you if doing so will incur any additional fees. The following are just my personal thoughts and should not be construed as advice. After all, I’m not a professional!
Fixed index annuities can offer steady retirement income payments that are based on an underlying stock market index (e.g. S&P 500 or NASDAQ). They generally provide some downside protection which limits loss of principal. However, that downside protection does come at a cost. Your potential gains are also limited, and you can observe that by looking at the “Participation Rate” of the annuity in question. Some are fully invested in the market, but others may only be 50% invested. Therefore, a fixed index annuity has its potential gains and losses capped.
Although annuities seem appealing for its guaranteed income during retirement, there are a number of risks to consider. Namely, annuities often charge higher management fees, have surrender charges, and can pose a risk of principal loss upon death. There’s a lot of fine print you want to read through because the expenses can quickly add up. Investopedia has a great article on it as well: www.investopedia.com/articles/retirement/02/031302.asp
The average annuity tends to charge about 2 to 3% annually in administrative and management fees, which is incredibly high. To put that in perspective, a Vanguard Target Retirement Fund (e.g. VTWNX) has an overall expense ratio of just 0.08% and automatically provides reallocation of a diversified portfolio of stocks and bonds. If we’re talking about a six figure portfolio, that is thousands of dollars in savings each year on management fees alone with a standard Target Retirement Fund. Annuities can also charge commissions and surrender charges if you withdraw money early, which can cut down on your income as well. If you unfortunately pass away early, the annuity company may end up keeping the remainder of your savings. Many annuities do offer the ability to transfer the remainder to beneficiaries, but they often charge an additional premium. A lot of insurance companies also note the tax benefits of annuities, but it’s worth mentioning that a traditional 401(k) is already tax-sheltered.
Overall, I’ve been pretty negative towards annuities but I’d say for good reasons. It can work in niche situations where you want some market exposure with less risk. However, most qualified financial advisors wouldn’t say annuities are for everyone, especially if it’s a 401(k) which already has incredible tax benefits. Most investors also just use a standard Target Retirement Fund because it achieves much of the same goals at a fraction of the cost. Plus, you could manage your money within the same brokerage platform without worrying about potential rollover taxes.
If you’re still interested in rolling over a 401(k) into an annuity, again I’d suggest talking with an advisor at your 401(k) broker so you can do a direct rollover. That way, you don’t risk forfeiting 20% of your balance and your process is as smooth as possible.
Any idea if identical [CUSIP] & [maturity date], for t-bills and/or brokered cd's, would have same yield-to-worst same across Merrill Edge and other popular platforms (Schwab, Vanguard, Morgan Stanley/Etrade, etc)? It seems as costs are nearly zero for unassisted trades, so I would like to pick a platform where [t-bill, cd] ] arbitrage is near zero?
Also, is transferring cash between a BofA savings && Merrill Edge (linked accounts?), instantaneous or are we subjected to hours or days of delay? I was not sure I fully understood this point, early in the video?
Thanks,
Great question, Picano! Because all full-service platforms operate on the secondary market, the yield-to-worst should *theoretically* be the same across all platforms. For Treasuries, I would say that yields are virtually identical. Brokered CDs are a little different where some brokers may offer more variety than others. I've noticed that Fidelity and Charles Schwab tend to offer the greatest number of banks which can be very helpful for longer term CDs.
So while Bank A's CD would offer the same yield across two platforms, Fidelity and Schwab may offer a Bank B that offers a higher yield. Merrill Edge does not trade Bank B, so their customers won't see these potentially better products. For CDs with durations of 1 year or less, the differences are pretty minimal (often 0 - 25 basis points). However, for 18 to 60 month CDs, the differences can be larger. The opposite could be true where Merrill Edge offers better/unique banks than Fidelity & Schwab, but I haven't seen that occur in the last 6 months.
For your last point, transfers between linked Bank of America and Merrill Edge accounts should be instantaneous/occur in real time. Hope that helps!
What is the offer price (100) means when purchasing CD?
Great question! CDs are initially sold at Face Value. So if I purchase $10,000 worth of CDs, my initial deposit is $10,000, and I will receive $10,000 + $X interest back on maturity date.
On the other hand, Treasuries are sold at a discount, so the initial deposit would be < $10,000 with exactly $10,000 returned on maturity date. Merrill Edge uses the same tools to describe both types of investments, so that’s how the offer prices differ!
I buy cds on Merrill. By the quantity box it says maximum trade value. My amount there is double my cash i have in the account. Does that mean i can buy the maximum trade value as my quantity? Thank you for your help.
Great question! The "Maximum Trade Value" indicates the maximum amount of money offered at the advertised "Yield to Worst" rate. For example, let's say I have $100,000 I'd like to use to buy a 5.5% yielding Treasury Bill with an "Maximum Trade Value" of $75,000. If I want to put all of my money in that specific T-Bill, I would have $75,000 earning a 5.5% yield. The remaining $25,000 would receive a different (and lower) yield of 5.25% as a hypothetical.
How do I know if the T-Bills offered at Merrill Edge are new issues or secondary market offers? Thanks
Unfortunately, I don't think there's an easy way to filter T-Bills between newer issues and secondary market offers. Generally speaking though, the vast majority of T-Bills/Notes/Bonds that you find under the "Fixed Income" page will be secondary market offers (there's no fees for secondary market treasuries).
@@EricTangOfficial can they both be sold before maturity and is there a difference of risk between those two?
They can both be sold before maturity date. There is no difference in risk between the two when it comes to T-Bills and most brokers don't charge any fees. When it comes to New Issued vs. Secondary Market CDs though, there is often a transaction fee charged by your brokerage firm ($1 per $1,000 CD for secondary market CDs).
How do I know from buying new brokered CD, where it indicates the APY interest is locked for a full CD term to earn full APY? Is selecting "Fixed income" indicated for a full term without early withdrawal?
Happy to clarify, and I hope I understood your question correctly! The "Yield" is the expected annualized return if you hold the CD until maturity date. So if you see a 4.5% yield on a 2-year noncallable CD, you should expect to see 4.5% APY/interest earned each year. A noncallable CD has a locked or "fixed" interest rate. A callable CD is one that can be changed at will by the issuing bank. If they agreed to pay you 4.7% but overall interest rates fall to 3%, they may call back the CD; you are still paid back your principal plus any accrued interest, but you won't be earning 4.7% anymore.
Shorter term Brokered CDs (1 year or less) often pay their interest all on maturity date. You can find this by selecting the specific security and searching for coupon frequency. Longer term or callable CDs often choose to pay their interest monthly, semiannually, or every single year. I should note though that the compounding effect of monthly vs yearly interest payments is largely negligible because it has already been factored into the yield calculations. Yields for fixed income assets all reflect the rate of return assuming that you hold until maturity date.
Hope that further explains things but feel free to let me know if you have any other questions!
Hi Eric, is rollover option available for short term T-bills on Merrill?
Great question! Unfortunately, I don't think you can automatically rollover short term Treasuries on Merrill Edge like other brokers do. You'd have to manually buy another T-Bill when the previous one matures.
Be careful with Callable CDs, the bank will call them, when the rates are unfavorable to them. Better off with non-callable for 2-5 year CDs
Very true! If interest rates are to fall, banks may end up calling to save some money!
You mean, u can loose your capital of a insurance CD. I mean all are insured. How can ??
Hi can we do this in the app or have to go to the web?
Great question, Jindan! The best way to do so is via the website!
Hi,Eric. On Merrill, there is a coupon rate for some of the Treasury bills. Do I have to add up the coupon rate? Or do I only have to pay attention to the Yield to the worst? Is coupon rate already included in the yield to worst?
Sorry for the delayed response, Will! Yes, the coupon rate is already included in the "Yield to Worst" (YTW). You can use YTW to calculate your annualized total yield on an investment.
The coupon rate provides the annualized interest payments on a security. This is primarily useful for people who need the regular income. For example, say there's a T-Bond yielding 4% might pay 2% through coupons every month. If you're retired and you want those regular payments to meet your bills, focusing on the coupons and coupon frequency is a good option.
For short-term savers though, YTW tends to be much more important. You may care less about the interest rate payments but more on the overall APY/return.
@@EricTangOfficial thank you so much for your reply. Now I already have a better understanding of purchasing Treasury bills and I have placed my order for 3 months bills.
I plan to convert bills to notes after they expire, but notes have a couple rate and discounted price. Could you help me to figure out how to calculate the annual yield?
Couple rate: 2.50%
Maturity date: 5/15/2024
Offer price: 97.366
Ytw: 4.546%.
Couple frequency: semi -annually
Could you help me with the math for the annual yield?
And if I spend 100,000 for this notes, do I get $2500 coupon annually since the couple rate is 2.5%
And plus 4 months more after a year, 2500 × 1/3= 833, so after it matures, I will get a total. Couple of 3333. And after it matures, I also get a return for the discounted par amount, which is 2634.
(3333+2634)/97366= 6.1% total return
6.1÷16 ×12= 4.575... wow it seems I got it right
So if I want to know how much money I will make when it expires with only yield , I could use 97366× 4.546% ×( 1+1/3)= 5901
Merrill only sells secondary Treasury securities online, I saw 5 years bonds with very low like 0.71% coupon rate but with a good discounted price. Like you said, most people prefer to have a higher couple rate to receive fixed income for spending. If the new issued 5 years bonds from Treasury direct would have higher yield? And if the new issued bonds are always sold at 100 par amount and full yields ?
Correct! Nicely done!
Eric, since I am unable to contact Merrill Edge by phone, perhaps you know the answer. Can I buy brokered CD in a Merrill Edge IRA brokerage account? Thanks for the video. I'm pretty sure the answer is no. Thanks.
Good question, David! Merrill Edge IRA Brokerage Accounts do allow you to purchase Brokered CDs. You can find them under the "Fixed Income" section under the "Research" Tab.
@@EricTangOfficial Thanks for responding Eric. I looked under the research tab but I am still unable to navigate to anything that resembles "Brokered CDs". Doesn't mean they're not there, just that I can't find it. I guess I will end up waiting on hold with Merrill. I will report back what they say. Thanks again.
Unfortunately, Merrill doesn't list/update the Brokered CDs or Treasury rates after market hours. In other words, no information is provided during the weekends. I'd recommend checking the site again on Monday morning and you should be able to see all of the updated yields. Hope that answers your concerns!
@@EricTangOfficial Will do. Thanks.
Eric, You were correct. Merrill Edge does allow the purchase of Brokered CDs inside their IRA accounts. I called today and they will make CD transactions free of charge by phone as well. Their Phone App is NOT set up to allow Brokered CD trades which is why I couldn't see a way to do it previously. You have to use the web site to purchase CDs without calling according to the rep.. At least for an IRA account. Not sure if it's the same for regular PMA accounts or not. Thanks for your help.
What is "Offer Price 100.0000"?
Good question! The "Offer Price" tells you how much money you will deposit today to earn back $100 on maturity date. When it comes to Treasuries, this "Offer Price" is discounted (e.g. 99.000). In other words, I might pay $990 today to earn back $1,000 in a few months. The yield comes from the difference between the two values ($10 profit)
When it comes to Brokered CD's, this "Offer Price" is always 100 face value because your interest in paid on top of the principal. In other words, I might pay $1,000 today and get back $1,050 on the maturity date.
How do you purchase these on mobile
Great question! Unfortunately, as of December 2023, Merrill Edge doesn't allow you to purchase fixed income products just yet. Hope they change it in the future!
@@EricTangOfficial thank you
ARE CD really safe in Merrill edge investment online? BASSICALLY DO YOU GET MONEY PLUS INTEREST THEY SAY? Why i got 100dollars charge per CD i bought ? Can you explain..thank you
Good question, Gisele! I'd take a look at Merrill Edge's fees to see which ones may be applicable for you: www.merrilledge.com/pricing
@@EricTangOfficial I saw $100 but banker said that is the part" I guess it is not a fee?
I have 4 accounts at Merrill and over the past year any time day or night you call them the wait time is much too long - between 15 min and 30 min which feels wrong for such a firm. I will most likely be moving my accounts this year to another firm due to this reason. shame on Merrill. Dan
Sorry to hear that you had so much trouble, Dan! Hope you have a better experience with something like Fidelity or Schwab!
I was on hold with them for 2 hours yesterday and finally gave up. The number on the app says they are available 24/7. I don't believe that's true. Plus there is at least a 2 minute automated intro when you call with information that doesn't apply to my question and it cannot be bypassed. Then it says you can expect extended hold times. Based on my phone experience with them recently, Merrill Edge does not want your business.
I am always a big fan of high paying treasury bills. Rates keep increasing and I keep loving it!
Absolutely! The rates are so good!
Right on, Barry! #SuperSavers
I'm interested in buying a 3 month treasury bill. When i google the rate for a 3 month t-bill it shows 4.59%. However, when I use Merrill's Fixed Income Screener for Treasuries, and filter for 0 - 1 year. There is only 1 entry, and its YTW is only 1.794%. Why can't i find a 3 month t-bill on Merrill?
Good question, Michael! Unfortunately, Merrill makes it unnecessarily difficult to search by durations. The easiest way I've found is to select for Treasury Bills maturing in 1 year or less. On the maturity date column, sort by ascending order. In other words, for maturity dates closest to the present at the top. You'll have to scroll down (or expand results per page) to find a treasury security 3 months from today.
One of the most recent Treasury Bills (912797FD4) maturing 5/9/2023 is yielding 4.6% APY for example!
Hi, Eric. If the annual yield for 3 months bills is 4.75%, if I invest $1000, how much will I earn when the bills expire?
Is it 1000* 0.0475* 1/4?
A rough approximation goes like this:
$1,000 * 4.75% * (3 months / 12 months) = $11.875.
You'd earn about $11.875 in "interest" when the T-Bill expires in 3 months.
The calculation is actually a little bit different when it comes to treasuries. You're actually buying a $1,000 government bond today at a discount. In other words, you can imagine paying $988.13 to the government today and receiving $1,000 3 months later.
@@EricTangOfficial some people say the rate will reach the peak between March and May this year. What is the best time to buy bonds this year, do you think? I am thinking about investing in either 2 or 3 years of Treasury notes. Would the yield go above 5% for notes?
I'm preparing another video on this very topic, but personally I think that rates will essentially plateau in 2023. I don't think yields will rise significantly from today's current prices. I don't personally believe that notes will go above 5% (in the short term) since they've largely plateau'ed at 4.5% ever since late October in spite of interest rate hikes.
@@EricTangOfficial that is true, the fed funds rate will stay high for a whole year according to Federal Reserve. We will have good chances to lock our bonds at a good rate this year. However, I feel like the CPI will not go down easily, let us see what the CPI will be on 01/12/2023 tomorrow Thursday.
Do the CDs automatically roll over?
Great question! CD's generally won't automatically over on Merrill Edge. You may have to manually purchase another security on the maturity date!
@@EricTangOfficial thanks for answering. I appreciate your content.
Are these new issues? Little confused
Great question! The examples in this video revolve around secondary market Treasuries & CDs. These are not newly issued ones. However, you can indeed buy newly issued CDs on Merrill Edge with the same procedure.
@@EricTangOfficial Thanks for the prompt response and clarification on this. I'll try the process again and see if I can find the "new" issues. On Schwab it literally says "new", but I don't see that on Merrill Edge, unless it shows up somewhere else.
I haven't found it either on Merrill Edge. Only newly issued CDs are easy to spot for me.
@@EricTangOfficial So I called them this morning...apparently you can only buy new issues t bills over the phone and to place the trade it's $29 ... lame!
Yikes! That’s such a big fee. Thanks for the heads-up, Gunther!!
Does Merryl offer 16-day Treasuries through the actions? Schwab does not, but Fidelity does.
Merrill Edge can offer Treasuries with a maturity date of as little as 1 week. The rates might not be as competitive since they're trading on the secondary market but there could be several options!
Nice video again Eric!
Thanks again!
Thank you for a wonderful explanation. I’m wondering however why when I do same steps I have absolutely no rates showing….
Thanks so much! Unfortunately, Merrill Edge typically only shows updated rates during market hours. CDs and Treasuries don't trade over the weekend so Merrill Edge doesn't show rates. You'll have to check in on Monday!
What's your portfolio allocation? Considering that you're so young, how much of a focus do you put on fixed income investing? I'm 35 myself so I have a 30 year investment time horizon, so I'm focused on stacking VOO and the likes. I have a bit of CDs to continue my savings and pay down my mortgage, but I'm still heavily invested in equity
Great question! The vast majority of my portfolio is held in passive index funds with a handful of individual stocks like Apple and Costco. A small portion is in brokered CD's and treasuries, but my biggest positions are still invested in the market.
@@EricTangOfficial can you do a stock market portfolio series on this channel?? it'd be cool to see how a smart guy like you builds his portfolio
I'll consider it!
Great info
Glad it was helpful!
Any idea how to sort for new issues on T Bills? I feel like other brokers have that option but I can’t seem to find it on Merrill.
Good question! I haven't found the setting for that, but new issues is generally applicable for brokered CD's, not treasuries. Most (if not all) brokers charge no fees on treasury purchases, including auction and secondary trades. So whether you buy a newly auctioned T-Bill or an expiring soon T-Bond, there are often $0 fees.
Make your bed.
Hi, Eric. Treasury bills look lots of different on Merrill. Currently I am looking at bills that mature at 03-09-2023, the offer price is 99.2581,it says the yield to worst is 4.263%,but how come? (100-99.2581)/ 99.2581 is only 0.7%.
I used the math from another video as:
[(100-99.2581)÷90(days)×365] / 99.2581, I still can't come out with this rate.. 😭 help
Does the yield to worst determines the final rate we can get for the investment? So if the rate is 4.263% for 3 months , then we just divide this by 4 to get the return for 3 months? So confusing
Sure thing! I believe the time between today (January 3rd) and March 9th is closer to about 60 days (about 2 months). So assuming that your calculation of the total return is 0.7%, you would estimate that the annualized yield is about 0.7% x (12 months / 2 months) = ~ 4.2%. This is pretty close to what Merrill Edge is calculating as the 4.263%. Ours is an approximation while theirs takes into account a 365 day yield.
The yield to worst determines the final annualized rate of return on the investment. In other words, assuming you don't sell before maturity date, this is the rate of return assuming you continually reinvested at the same rate for an entire year.
Hi,Eric. Please help me again with the one year T-notes which will mature on 04/30/2024.The accured interest costs 1094.73.
Price :97.4844
Coupon rate: 2.25%
Quantity:103000
Frequency: semi-annually
Yield to worst:4.787
Estimated principal amount:100408.91.
The coupon will be paid for 1158.75 in April 2023 and October 2023(shown on merill).
Question 1: The first coupon paid on April 2023 includes the accured interest paid to the seller. Do i pay tax for that accured interest since it is included in the first coupon payment paid to me?
Question 2: how do I calculate interest accumulated between Octor 2023 and the mature date 04/30/2024 and how do I get paid for that? Or if I will miss the coupon for that period.
Question 3: it seems like I paid extra for this purchase because of the accured interest, will I be paid back for that ? Or it is already included in the first coupon payment in April 2023?
Question 4: how do I come to the yield to worst shown above? [1158.75×2 +( 103000-100408)] ÷ 100408= 4.88% it is pretty close to the YTW, but it seems like total coupon include accured interest ,if I deduct the accured interest, the return would be much less...
I hope the Merrill Edge transfer works out! I use fidelity whose way more responsive and quick with their transfers.
Fidelity does get the crown on speed! 👑