What is your approach to buying Treasury Bills? For those interested in more content I create check these out: 💸 Investing 101 Free Guide (new release): moneytalkmonday.ck.page/investing101 🗞 Get My Free Weekly Newsletter: moneytalkmonday.ck.page/signup 🔑 My Exclusive Content: moneytalkmonday.ck.page/products/paid-newsletter
I've been involved with Treasury Direct since March or so... in July, I set about buying a $100 4w T-bill every week since, setting the reinvestments to carry it through maturity in Dec of 2024. Will be continuing the weekly purchases through November of 2024, all the while the many multiples of reinvestment refunds pouring in every Tuesday until it's maturity time all Tuesdays though Dec '24.... I originally started doing this in in the smoldering aftermath of the SVB/FRB fiasco that took place in March. Treasuries, if held to maturity, will never lose. Government shutdowns and all that noise cannot stop the treasury from doing what they do. There will never be a "default", which was on everyone's mind back in late May... Your money is infinitely safer wrapped up in a 4w t-bill than it is in a bank who's paying you a bit of interest by doing exactly what I just told you what I'm doing. I decided to end-run the banks and take all of that interest all myself!!
@LucaMaggio-jm8td Not exactly sure what your looking for... At 16, you'd have to go through one of your parents to do anything financial, so maybe you could ask them.
If you buy a 4-week T-bill, say at 5% and at the end of the maturity date ie 4 weeks you will only get 1/12 of that 5%. You would need to buy a 52-week T-bill to get the entire 5%. So, with a $50k investment you would get $208 dollars at the end of the 4 weeks.
Excellent video i could never get my head around treasuries, you explained it very well. I watched this in the farm shed on the side of the hill in Ireland. Thank you
I can do it with your guidance on fidelity, but I tried to even contemplate and look at Treasury direct and I get lost. But as long as they are the same price on Primary/auction. I will stick with the ease of fidelity. Time to cash in those old Ibonds that were at 9.62% but are now at 3.8%. New ibond rate is 5.27% so we'll see if the T bills are better, since I can hold them shorter and roll them over on auto. Thank you sir for helping this old lady, lol..
Honestly i suck with all financial terms n stuff of this nature but this was very helpful, i seen a video on Instagram about this and was so confused so i came to youtube, and now i completely understand and confident enough to purchase- Definitely love the visuals , keep doing that lol.
Welcome to the ponzi. What's crazier then that is that we are taxed on the nominal capital gain, not the inflation adjusted gain. Much of our capital gains are just a reflection of the devaluation of the dollars we price it in, YET WE HAVE TO GO AND PAY TAXES ON THE NOMINAL VALUE, NOT THE REAL VALUE 🤯 The system is rigged to extract wealth from the people participating in it.
Another great video, I could definitely see you taking off like Caleb Hammer; best of luck to you! Regarding investing, I personally have a pension, 401K, Roth IRA (which one of your videos is directly responsible for, so thank you) and high yield savings. My high yield is at 5.4% APY - beyond a safe way to diversify, do you feel there's a real advantage in treasury bills verses a high yield that's paying monthly? Just curios on your thoughts... Love the content, keep it up!
Thank you! That would be amazing, I appreciate all of your kind words. As far as safety, T bills are backed by the government and HYSA are FDIC insured so no big difference. Something about T-Bills is that you get exempt from state and local taxes, which could be beneficial. For more conservative investment portfolios, it's also a great way to diversify more. Another reason to get Treasury Bills is if you think rates could go down in the near future because they fluctuate at any time with HYSA's. Ex: If you get a 12 month t bill at 5.4%, then you're guaranteed that for 12 months unlike HYSA. In my view, HYSA is for cash you want liquid (ex: Emergency Fund/Bank Account), and Treasury Bill that you don't need and can lock in a great rate for a fixed and guaranteed period of time until you need it (ex: Home Purchase). Does that make sense?
Yes, I plan to try it out, I have just been torn between using my chase private client or use my fidelity (hold my 401k). Chase have been trying to make me pay for their advisory services, but I have refused only because I have been trying to educate myself & do this on my own. I am considering this T bill as part of my diversification portfolio. Your videos have been helpful, I hope Fidelity gets to make you part of their team. 😁
Educating yourself is always great and there are plenty of ways to learn online! Thank you for your kind words, i'm glad to hear my videos help. It means a lot to me. And maybe one day Fidelity will haha.
I'm learning as well. There are *so* many great YT tutorials, like this one -- giving some schmuck 1% of your wealth each year to manage your portfolio is so old-school and useless. You can carefully hire a fiduciary by the hour only if and when necessary.
@@DannySully hey, thanks again. Doing my first T-bill purchase ever today! An eventual video topic suggestion for you: When (and why) to hire a fiduciary adviser (by the hour), how, and how to prep for the meeting. Hope that makes sense.
👍 and subbed! That was the perfect explanation of t-bills, finally! No cartoons educating me on how my government needs to build schools and bridges, bla bla bla… just awesome slides with the meat and potatoes. Look forward to your other vids
Great video Danny! Why would i not purchase T bills with a 4 week maturity date compared to a 52 week date? If i have 50k to invest what would be the yield difference?
Thank you! And the yields may be very similar. The difference many don’t see upfront is that the yield is an annual yield. So if you get a short time period (example: 26weeks), then the yield is half of what you see (ex: 5%\2). Personally, either get the highest yield or the time frame that suits you best. With 4 week bills you could also do a t bill ladder.
What are the advantages and disadvantages of BUYING in the primary vs. secondary market? Not having to wait for an auction is useful to me, but what are the other benefits? It is unlikely that I will need a market to do any selling although I would never rule it out entirely.
Good day. May i ask one question.... so lets say someone bought 10.000$ worth of 10 year treasury notes at year 2020 when the apr was 0.5% for that asset. Now it is 5% lets say roughly ..... so how much does the principal value (I mean that 10.000$ that I paid at 2020) how much that value has dropped if I want to sell in the open market and do not wait for the maturity??? And also is there any chart that may show not the rate fluctuations but the principal value fluctuations of the rates on open market? what I should search for to see such charts? thanks in advance!!! hope you will answer
When the treasury bill expires, you will receive the full amount in your account automatically and no additional treasuries will be purchased after. The auto-roll feature just allows you to keep investing in treasuries as they mature so you don't have to do it manually every time. Hope this helps :)
Is this a paper bond? I'm not sure what type of bond you're mentioning but you could look it up online and search for what its value could be. www.treasurydirect.gov/indiv/help/bc/savings-bond-calc-instructions/
Hey, great to hear you are starting to invest! You mention treasury bill ETFs, since these are ETFs, the maturity does not matter. You are simply buying into a fund that purchases many different types. Treasury ETFs typically pay interest monthly or quarterly. Since i don't know the exact one I can't tell you for sure but since it is an ETF your money is extremely liquid and you can sell any time you'd like. Hope this helps :) Thanks for watching my video!
1:00 that is technically a lie. When you buy a t bill you DO NOT know what the interest rate will be until after the institutions have bid and you’re given your rate after. After the auction has been awarded you’ll know what you’re going to get, but by then it’s a bit too late if you don’t like the rate you got.
If I buy a bond for $1000 wouldn’t I just be getting my $1000 back without interest if the interest itself is just a discount of said $1000? It’s not a discount if $1000 is taken out of my account and the government takes $900 and gives that $900 back and breaks up the $100 over time. In sum itll still just be $1000. Maybe I’m not understanding correctly.
If you buy a $1000 bond, you will pay less than $1000 and when it matures you get $1000 back. The difference between what you paid and what is returned to you at maturity is the interest you earned.
From my research it says you can as long as you have a tax identification number like SSN. Check out this post on Quora (link below). I think if you go through a brokerage firm that allows you (not sure what location you are in) but if they allow you and they offer us treasuries, you may be able to that way. I think a brokerage firm is your best bet. I'm sorry I do not have experience with this but I tried looking into it for you. Also, thank you for watching my video! Quora link: www.quora.com/How-can-a-non-US-citizen-invest-in-US-Treasury-Bonds
They are exempt from state and local taxes. The only taxes are federal income taxes. The platform will generate a 1099-INT form on all interest income you captured throughout the year for the account. This includes t bills, but also all investments you take a capital gain on. Then you will have to file and use that form when tax season comes.
Go to your tax preparer and pose him the question, what is my federal effective tax rate. Mine for example is 13%, so every interest payment I get, I know I need to set aside 13% of it for taxes, minimum. So if I get $1000 after a 28 day t bill matures, 13% will mean I set aside literally or in my head, $130. If you’ve changed nothing with your current tax withholding scheme, and you had let’s say a 5-6 hundred refund before, that $130 is going to eat right into that refund and if it continues eventually you’ll owe quite a bit in taxes. At treasury direct you can go into your account options and designate them to withhold taxes before disbursing payments.
Here's what I can't figure out: a 4-week Tbill and a 3-month Tbill pay roughly the same 5% right now. During the same 3 months, I could have 5%X3 if I buy 4-week or 5%X1 if I buy 3-month. Why would I buy 3-month?
That 5% is your Annual Percentage Yield (APY) so for any T-bills that have a term less than 1 year you would need to factor the shorter term to determine your true interest rate. For example a $1000 1 year t-bill at 5% APY would earn you $50 in that 1 year, but a $1000 6 month t bill at 5% APY would only earn you $25 in that 6 months, because it is half the year. If a 3 month and a 4 week T bill show 5% then they will be paying out the same from an interest to time ratio perspective whether you buy one 3 month T-bill or three 4 week t bills over the next three months. The only unknown factor is the interest rate on the 4 week t bill may be less (or more) when you go to buy the second and third 4 week t bill. Hopefully I explained it well!
Why bother with all that when you can get 5.35% in High Yield Savings accounts and Money Market Accounts?!?! That's what I'm getting on my accounts. Much better and easier than this.
Hey! To clear up your statement, it is 5% over a year (annually), not every 4 weeks. If you get a 4 week t bill that 5% rate will be cut by 12 (months).
Good video, but one thing you failed to explain for beginners is how to cash T-bills in upon maturity. Do I have to call the brokerage and ask for my money, or can I do it online?
Hi there, I apologize I must have missed noting that. To cash out at maturity, just make sure auto roll is turned off. At maturity, it will settle and no more t bills will be purchased :) Thank you for watching my content, hope this helps!
good video, but ... I feel this is not for beginners, who have no idea what treasury bills are. You speak too fast, not giving enough time for first time listeners to learn. Instead of 'telling' us what you know, I feel you should 'teach' us. That means explaining each term/concept and not just quickly run through them. Just my humble feedback.
Correct lol. The purpose is to reduce risk so you know you aren't going to lose money you have saved. I don't have much and agree in that perspective it is not much. With a large sum for diversification it can be wise as approaching retirement for assurance
how much interest do you expect to earn on $950. Obviosuly, the bigger the investment, the bigger the payout. Buy $500,000 in Tbils and make $25,000 a year.
You can change the playback speed to 0.75 if a video feels too fast -- just click on the "gear" icon on the bottom right, then "Playback speed". Does this make sense to you?
Hey I’m sorry I thought I mentioned it. There are no fees unless you have a representative place the purchases for you. I’m not sponsored with Fidelity, I use them the most and is where I use my treasury bills so It was easiest for me to explain using their platform. Vanguard and others are also the same way. Hope this helps!
@@Danaw0207yes. Fidelity charges no fee if you purchase online. If you use their telephone support to purchase T bills there is a fee. The US government compensates them
Mercy!! You need to put a disclaimer on here, telling people that you'll be explaining everything at the speed of a race car driver, on his last lap to victory!! My mind just doesn't go that fast, and have to hit the stop button, every 10 seconds, and then GO again, isn't worth it! I can't "thumb up" you either, but you got enough of those anyway! All of those people must have been in the race car with you, as you explained this subect...lol. So sorry, I'm OUTTA HERE to find someone MUCH slower in explaining this!
You can change the playback speed to 0.75 if a video feels too fast -- just click on the "gear" icon on the bottom right, then "Playback speed". Does this make sense to you? (I actually listen at 1.25x !)
YT Premium is *totally worth the cost* for that reason in my opinion as someone who is on YT very often...plus free YT Music, so no Spotify/Apple Music necessary.
Free YT music? You are paying for it. I would pay 25 dollarsa a year tops for youtube premium. I will not be extorted by youtube and google. I don't care about the music. I pay for Amazon prime, that is worth it given the amount of stuff I buy.. The only thing youtube is doing is pissing off viewers like myself. I have decreased my viewing about 99%@@Yowzoe
@@js3883 whatever works for you is fine…we are all different. CZcams Music is fantastic, music is a huge part of my life during the day, in the shower, when the neighbor is running lawnmower, etc. etc. It's free in the sense that it's bundled in (no extra cost) with an already incredibly valuable thing which is not watching and hearing ugly ads. I have no tolerance for listening to even one ad, and I haven't heard an ad in about three years. Fantastic for your mental health not to be barrage by ugly ads. I think we can agree on that at least. You seem to think that you were extorted by CZcams and Google. They are businesses, with employees and shareholders, and they deserve to make a profit. Their profit comes from either subscriptions or ads. So I believe your obvious anger is completely misdirected. The fact that you're pissed-off makes *zero* difference to them, and if you're not getting all the value that you can out of CZcams with all its incredible tutorials and film analyses and history channels and science channels and finances channels (like this one), and all the other incredibly great content (along with all the obvious dreck, of course), then you're only hurting yourself. In my opinion.
What is your approach to buying Treasury Bills?
For those interested in more content I create check these out:
💸 Investing 101 Free Guide (new release): moneytalkmonday.ck.page/investing101
🗞 Get My Free Weekly Newsletter: moneytalkmonday.ck.page/signup
🔑 My Exclusive Content: moneytalkmonday.ck.page/products/paid-newsletter
I've been involved with Treasury Direct since March or so... in July, I set about buying a $100 4w T-bill every week since, setting the reinvestments to carry it through maturity in Dec of 2024. Will be continuing the weekly purchases through November of 2024, all the while the many multiples of reinvestment refunds pouring in every Tuesday until it's maturity time all Tuesdays though Dec '24.... I originally started doing this in in the smoldering aftermath of the SVB/FRB fiasco that took place in March. Treasuries, if held to maturity, will never lose. Government shutdowns and all that noise cannot stop the treasury from doing what they do. There will never be a "default", which was on everyone's mind back in late May... Your money is infinitely safer wrapped up in a 4w t-bill than it is in a bank who's paying you a bit of interest by doing exactly what I just told you what I'm doing. I decided to end-run the banks and take all of that interest all myself!!
Okok, now we’re 4 months after.. any new suggestions? I’m 16 I’d love any solid recommendations:)
@LucaMaggio-jm8td Not exactly sure what your looking for... At 16, you'd have to go through one of your parents to do anything financial, so maybe you could ask them.
If you buy a 4-week T-bill, say at 5% and at the end of the maturity date ie 4 weeks you will only get 1/12 of that 5%. You would need to buy a 52-week T-bill to get the entire 5%. So, with a $50k investment you would get $208 dollars at the end of the 4 weeks.
Yes that is correct, if rates stayed the same. And one year would be 5% of 50k which is 2.5k.
Well that puts a damper…
So you have to do the max term 52 weeks to get the full interest rate??
@@MemoirsofaBasketcasewell what are we getting in banks🤷🏾♂️
Well what the heck. I was all excited for nothing
Excellent video i could never get my head around treasuries, you explained it very well. I watched this in the farm shed on the side of the hill in Ireland. Thank you
Thank you, I appreciate your feedback!
You are awesome - you explained this so well that someone as hard headed like me can understand. Thank you.
That is so nice of you and means so much to me to hear that, thank you as well!!
@@DannySully My pleasure :-)
Hard headed means unemotional and sensible. I am English so trust me on this..
Good video! I’ve purchased T bills a few times via Fidelity but you filled in a gap for me around new issues! Ty
I'm glad to hear that, thank you! :)
Wow! An rare actual worthwhile YT video plus it's a video which lives up to it's title. Excellent.
That means a lot to me to hear that! Thank you so much :)
Thank you for clearly explaining that you will not get the full return on a 6 month T-Bill vs one year (at 11:40) 😊
:)
I can do it with your guidance on fidelity, but I tried to even contemplate and look at Treasury direct and I get lost. But as long as they are the same price on Primary/auction. I will stick with the ease of fidelity. Time to cash in those old Ibonds that were at 9.62% but are now at 3.8%. New ibond rate is 5.27% so we'll see if the T bills are better, since I can hold them shorter and roll them over on auto. Thank you sir for helping this old lady, lol..
Great to hear that! Thank you for your input and watching my content, I hope the best going forward for you! :)
Honestly i suck with all financial terms n stuff of this nature but this was very helpful, i seen a video on Instagram about this and was so confused so i came to youtube, and now i completely understand and confident enough to purchase- Definitely love the visuals , keep doing that lol.
Thank you for your comment, I appreciate your feedback a ton and am glad to hear it helped! And will do! lol
Thank you for clearing the information for me. I purchased bills on treasury direct 13week.
Of course! Thank you for watching and giving your feedback! Very high rates right now.
Great information. Glad I found your channel!
Thank you!!
Why do I have to pay federal tax again if I’m investing from my NET income? This is F up.
You only pay taxes on what you made in interest, like on a money market or savings account. You do not pay taxes on the whole amount. Duh!
Welcome to the ponzi. What's crazier then that is that we are taxed on the nominal capital gain, not the inflation adjusted gain. Much of our capital gains are just a reflection of the devaluation of the dollars we price it in, YET WE HAVE TO GO AND PAY TAXES ON THE NOMINAL VALUE, NOT THE REAL VALUE 🤯
The system is rigged to extract wealth from the people participating in it.
Thank you for your video. I look forward to continuing to explore your channel
That means so much to me, thank you!!
Another great video, I could definitely see you taking off like Caleb Hammer; best of luck to you!
Regarding investing, I personally have a pension, 401K, Roth IRA (which one of your videos is directly responsible for, so thank you) and high yield savings. My high yield is at 5.4% APY - beyond a safe way to diversify, do you feel there's a real advantage in treasury bills verses a high yield that's paying monthly? Just curios on your thoughts... Love the content, keep it up!
Thank you! That would be amazing, I appreciate all of your kind words. As far as safety, T bills are backed by the government and HYSA are FDIC insured so no big difference. Something about T-Bills is that you get exempt from state and local taxes, which could be beneficial. For more conservative investment portfolios, it's also a great way to diversify more. Another reason to get Treasury Bills is if you think rates could go down in the near future because they fluctuate at any time with HYSA's.
Ex: If you get a 12 month t bill at 5.4%, then you're guaranteed that for 12 months unlike HYSA. In my view, HYSA is for cash you want liquid (ex: Emergency Fund/Bank Account), and Treasury Bill that you don't need and can lock in a great rate for a fixed and guaranteed period of time until you need it (ex: Home Purchase). Does that make sense?
Also, HYSA earnings are taxable by the state, and federal Govt. whereas treasury bills are only taxed by the federal govt.
@@DannySully yes, makes sense, helpful reply!
agreed, this guy has got the mojo
Broke it down so thoroughly, loved the video!
Thank you so much!!
Definitely better! Thanks Danny
I got your message! Thank you! I’m going to make sure it’s better going forward as well. Appreciate it seriously:)
Good video. Thanks Danny!
Thank you! :)
Very helpful and accurate -- thanks.
Of course! And thank you for your comment
Very good job with this. Very fluid and factual.
Thank you! That means a lot to me!
Yes, I plan to try it out, I have just been torn between using my chase private client or use my fidelity (hold my 401k). Chase have been trying to make me pay for their advisory services, but I have refused only because I have been trying to educate myself & do this on my own. I am considering this T bill as part of my diversification portfolio. Your videos have been helpful, I hope Fidelity gets to make you part of their team. 😁
Educating yourself is always great and there are plenty of ways to learn online! Thank you for your kind words, i'm glad to hear my videos help. It means a lot to me. And maybe one day Fidelity will haha.
I'm learning as well. There are *so* many great YT tutorials, like this one -- giving some schmuck 1% of your wealth each year to manage your portfolio is so old-school and useless.
You can carefully hire a fiduciary by the hour only if and when necessary.
@@DannySully hey, thanks again. Doing my first T-bill purchase ever today!
An eventual video topic suggestion for you:
When (and why) to hire a fiduciary adviser (by the hour), how, and how to prep for the meeting. Hope that makes sense.
Thank you for your kind words! I’m happy to hear about your first purchase. And thanks for the video suggestions, I love to hear them!
👍 and subbed! That was the perfect explanation of t-bills, finally! No cartoons educating me on how my government needs to build schools and bridges, bla bla bla… just awesome slides with the meat and potatoes. Look forward to your other vids
Thank you so much for your words! That means a lot to me and I’ll definitely continue doing my best! 👍
Are T-bills and municipal bonds the safest to buy now? . When should we sell them - when interest goes down ?
Wait for maturity, as the FFR isn't going down for longer than most would be willing to wat for...
Great video. Thanks
Of course, thank you!
Great video Danny! Why would i not purchase T bills with a 4 week maturity date compared to a 52 week date? If i have 50k to invest what would be the yield difference?
Thank you! And the yields may be very similar. The difference many don’t see upfront is that the yield is an annual yield. So if you get a short time period (example: 26weeks), then the yield is half of what you see (ex: 5%\2). Personally, either get the highest yield or the time frame that suits you best. With 4 week bills you could also do a t bill ladder.
What are the advantages and disadvantages of BUYING in the primary vs. secondary market? Not having to wait for an auction is useful to me, but what are the other benefits? It is unlikely that I will need a market to do any selling although I would never rule it out entirely.
Anyone else have a pending t bill interest payment that is different than what you expect it to be, for a bill maturing on Jan 2nd?
Good video...thank you for the education! But no risk? The government is 33 trillion in debt!
I think your speed is good as is. Whatever I missed, I can go back and listen again. Slow talking can lose audience.
Thank you for this feedback! I really appreciate it 🙂
So are the treasury bills from secondary market fixed you’re going to get that 5% back after 3 months
Yes it is a fixed rate as well, assuming you hold the entire maturity length. If you sell treasury bills early, the rates can change.
Thanks I’ll have to look in to my records I was holding it and matured today but I haven’t seen the 5% yet I only got my investment back so far
Good day. May i ask one question.... so lets say someone bought 10.000$ worth of 10 year treasury notes at year 2020 when the apr was 0.5% for that asset. Now it is 5% lets say roughly ..... so how much does the principal value (I mean that 10.000$ that I paid at 2020) how much that value has dropped if I want to sell in the open market and do not wait for the maturity??? And also is there any chart that may show not the rate fluctuations but the principal value fluctuations of the rates on open market? what I should search for to see such charts? thanks in advance!!! hope you will answer
Are T-Bills held within ETF's still exempt from State/Local taxes?
And/Or if you do it through a broker(fidelity) is it Exempt too? And do they do the calculation?
I didn’t know Esteban Ocon gave investment advice
Great info
Thank you!
If you choose not to auto-roll, how do you receive the earnings?
When the treasury bill expires, you will receive the full amount in your account automatically and no additional treasuries will be purchased after. The auto-roll feature just allows you to keep investing in treasuries as they mature so you don't have to do it manually every time. Hope this helps :)
Good video, very well explained where not to invest, lol
he can teach me anything anytime lol
is this similar to building a CD ladder?
That’s correct!
I have a $100 bond that my friend gifted to my kid 16 years ago. How do I know how much its values now?
Is this a paper bond? I'm not sure what type of bond you're mentioning but you could look it up online and search for what its value could be. www.treasurydirect.gov/indiv/help/bc/savings-bond-calc-instructions/
Yes, it’s a paper bond . Thank you!
how much was it@@LW0625
@@LW0625 how much is your kid's bond worth today?
I am a new investor (not my area of expertise AT ALL). I am using Robinhood to start out, and I can buy fractional shares of treasury bills ETFs(
Hey, great to hear you are starting to invest! You mention treasury bill ETFs, since these are ETFs, the maturity does not matter. You are simply buying into a fund that purchases many different types. Treasury ETFs typically pay interest monthly or quarterly. Since i don't know the exact one I can't tell you for sure but since it is an ETF your money is extremely liquid and you can sell any time you'd like. Hope this helps :) Thanks for watching my video!
@@DannySully Wow, thanks for this explanation! I suspected that was the case, but I just really needed that confirmation!
1:00 that is technically a lie. When you buy a t bill you DO NOT know what the interest rate will be until after the institutions have bid and you’re given your rate after. After the auction has been awarded you’ll know what you’re going to get, but by then it’s a bit too late if you don’t like the rate you got.
Great. Any fees or costs to buy through Fidelity?
Nope! Only if you have a fidelity representative do it for you.
If I buy a bond for $1000 wouldn’t I just be getting my $1000 back without interest if the interest itself is just a discount of said $1000? It’s not a discount if $1000 is taken out of my account and the government takes $900 and gives that $900 back and breaks up the $100 over time. In sum itll still just be $1000. Maybe I’m not understanding correctly.
If you buy a $1000 bond, you will pay less than $1000 and when it matures you get $1000 back. The difference between what you paid and what is returned to you at maturity is the interest you earned.
Do you have to be a US citizen to invest in this?
From my research it says you can as long as you have a tax identification number like SSN. Check out this post on Quora (link below). I think if you go through a brokerage firm that allows you (not sure what location you are in) but if they allow you and they offer us treasuries, you may be able to that way. I think a brokerage firm is your best bet. I'm sorry I do not have experience with this but I tried looking into it for you. Also, thank you for watching my video!
Quora link: www.quora.com/How-can-a-non-US-citizen-invest-in-US-Treasury-Bonds
Curious how does this affect your taxes?
They are exempt from state and local taxes. The only taxes are federal income taxes. The platform will generate a 1099-INT form on all interest income you captured throughout the year for the account. This includes t bills, but also all investments you take a capital gain on. Then you will have to file and use that form when tax season comes.
How much you're taxed on it depends on your tax bracket and whether you're filing single or married..
Thank you for adding that, great point!
Go to your tax preparer and pose him the question, what is my federal effective tax rate. Mine for example is 13%, so every interest payment I get, I know I need to set aside 13% of it for taxes, minimum. So if I get $1000 after a 28 day t bill matures, 13% will mean I set aside literally or in my head, $130. If you’ve changed nothing with your current tax withholding scheme, and you had let’s say a 5-6 hundred refund before, that $130 is going to eat right into that refund and if it continues eventually you’ll owe quite a bit in taxes. At treasury direct you can go into your account options and designate them to withhold taxes before disbursing payments.
Tried to sign up for account in Treasury direct n got an error ughhhh
I use Fidelity for mine and find it so much easier!
Here's what I can't figure out: a 4-week Tbill and a 3-month Tbill pay roughly the same 5% right now. During the same 3 months, I could have 5%X3 if I buy 4-week or 5%X1 if I buy 3-month. Why would I buy 3-month?
That 5% is your Annual Percentage Yield (APY) so for any T-bills that have a term less than 1 year you would need to factor the shorter term to determine your true interest rate. For example a $1000 1 year t-bill at 5% APY would earn you $50 in that 1 year, but a $1000 6 month t bill at 5% APY would only earn you $25 in that 6 months, because it is half the year. If a 3 month and a 4 week T bill show 5% then they will be paying out the same from an interest to time ratio perspective whether you buy one 3 month T-bill or three 4 week t bills over the next three months. The only unknown factor is the interest rate on the 4 week t bill may be less (or more) when you go to buy the second and third 4 week t bill. Hopefully I explained it well!
Why bother with all that when you can get 5.35% in High Yield Savings accounts and Money Market Accounts?!?! That's what I'm getting on my accounts. Much better and easier than this.
Savings interest is state taxed income. T-Bills are only taxes by the FED. In places like CA, that's like 10% in state tax...
5% every 4 weeks compounded will nearly double your money in a year with virtually no risk. The only question is how long will the inversion last.
Hey! To clear up your statement, it is 5% over a year (annually), not every 4 weeks. If you get a 4 week t bill that 5% rate will be cut by 12 (months).
Good video, but one thing you failed to explain for beginners is how to cash T-bills in upon maturity. Do I have to call the brokerage and ask for my money, or can I do it online?
Hi there, I apologize I must have missed noting that. To cash out at maturity, just make sure auto roll is turned off. At maturity, it will settle and no more t bills will be purchased :) Thank you for watching my content, hope this helps!
how do you edit your videos with the animation?
I use Final Cut Pro and also have some plug ins that help. My editor uses premiere pro
@@DannySully ah ok thanks. Those animations make the video that much more interesting.
When we say we have to pay federal taxes on these, is that taxes on the money made off the interest or full amount (initial investment +interest)?
It will be only on the interest earned! Great question.
@DannysMoneyTalk woah thanks for such a quick response! Earned a subscriber! Great work you are doing.
@@DeepHouseGuy83 thank you so much! That means a lot to me
good video, but ...
I feel this is not for beginners, who have no idea what treasury bills are. You speak too fast, not giving enough time for first time listeners to learn.
Instead of 'telling' us what you know, I feel you should 'teach' us. That means explaining each term/concept and not just quickly run through them. Just my humble feedback.
Thank you for your honest opinion. I will use that as great feedback for the next videos I create. Much appreciated
Is there full faith and trust in the United States government anymore?
so is there bill that will pay 5percent every month ?
No, sadly!
So I throw 950 bucks to the Federal Government and after 1 year it gives me a fat additional 50 bucks back. Fifty.
Wow.
Correct lol. The purpose is to reduce risk so you know you aren't going to lose money you have saved. I don't have much and agree in that perspective it is not much. With a large sum for diversification it can be wise as approaching retirement for assurance
how much interest do you expect to earn on $950. Obviosuly, the bigger the investment, the bigger the payout. Buy $500,000 in Tbils and make $25,000 a year.
I just don’t understand investing 10,000 to for 6 months to get back 200. That’s a lot of money
Rates are very high right now, it is a lot i agree!
You talk too fast, I feel like I am at the auction place.
I apologize for this, I will work on improving that for future videos.
@@DannySully nah, your pace is perfect (and no words are wasted, which people appreciate)
You can change the playback speed to 0.75 if a video feels too fast -- just click on the "gear" icon on the bottom right, then "Playback speed". Does this make sense to you?
😂😂😂
That’s funny, 😅I sped him up lmao
so, you don't talk about fees, but highly tout fidelity.
Hey I’m sorry I thought I mentioned it. There are no fees unless you have a representative place the purchases for you. I’m not sponsored with Fidelity, I use them the most and is where I use my treasury bills so It was easiest for me to explain using their platform. Vanguard and others are also the same way. Hope this helps!
@@DannySully wait, zero fees for using their system to buy Treasury's? How's that possible?
@@Danaw0207yes. Fidelity charges no fee if you purchase online. If you use their telephone support to purchase T bills there is a fee. The US government compensates them
Thank you ^*
@@DannySullyso are you sure there are zero fees from purchasing t bills from fidelity on my own?
That etf has lost money over time. Seems like not such a great investment
Why are you talking so fast?! Geez.
Mercy!! You need to put a disclaimer on here, telling people that you'll be explaining everything at the speed of a race car driver, on his last lap to victory!! My mind just doesn't go that fast, and have to hit the stop button, every 10 seconds, and then GO again, isn't worth it! I can't "thumb up" you either, but you got enough of those anyway! All of those people must have been in the race car with you, as you explained this subect...lol. So sorry, I'm OUTTA HERE to find someone MUCH slower in explaining this!
im sorry the money the federal government paid you for loaning them money is still taxed by the federal government? lmao
lol
You talk too fast. Not the thing to do when you're talking to people who have no knowledge of what you're talking about.
I’m sorry about this, I will work on it going forward. Thank you for your feedback
You can change the playback speed to 0.75 if a video feels too fast -- just click on the "gear" icon on the bottom right, then "Playback speed". Does this make sense to you?
(I actually listen at 1.25x !)
Just lower the speed of the video
You can slow it down in the settings I often speed up people to x1.75 😂 else they are so slow I space out and forget what they where saying
@@DannySully You 🔥 G. If I missed something, I just pause and play it back.
Boycott youtube and their forced ads! My view has dropped 99%. Sorry dude.
YT Premium is *totally worth the cost* for that reason in my opinion as someone who is on YT very often...plus free YT Music, so no Spotify/Apple Music necessary.
Free YT music? You are paying for it. I would pay 25 dollarsa a year tops for youtube premium. I will not be extorted by youtube and google. I don't care about the music. I pay for Amazon prime, that is worth it given the amount of stuff I buy.. The only thing youtube is doing is pissing off viewers like myself. I have decreased my viewing about 99%@@Yowzoe
@@js3883 whatever works for you is fine…we are all different. CZcams Music is fantastic, music is a huge part of my life during the day, in the shower, when the neighbor is running lawnmower, etc. etc.
It's free in the sense that it's bundled in (no extra cost) with an already incredibly valuable thing which is not watching and hearing ugly ads. I have no tolerance for listening to even one ad, and I haven't heard an ad in about three years. Fantastic for your mental health not to be barrage by ugly ads. I think we can agree on that at least.
You seem to think that you were extorted by CZcams and Google. They are businesses, with employees and shareholders, and they deserve to make a profit. Their profit comes from either subscriptions or ads. So I believe your obvious anger is completely misdirected. The fact that you're pissed-off makes *zero* difference to them, and if you're not getting all the value that you can out of CZcams with all its incredible tutorials and film analyses and history channels and science channels and finances channels (like this one), and all the other incredibly great content (along with all the obvious dreck, of course), then you're only hurting yourself. In my opinion.
@@js3883well luckily theres no monthly subscription (as of right now) to even have access to all of this knowledge on the CZcams platform.
You talk Waaay to fast !!
U don't have a womam
🌽🌽🌽