Buying T-Bills

Trying to change it up on my financial side for a bit by purchasing T-Bills from both my Fidelity Investments account and at Treasury Direct.

Both methods were honestly quite simple. Through the Fidelity account, I was buying them on the secondary market. Treasury Direct is an auction and when you sign up the return is not known. You have a good idea, but you won’t know until it is purchased. Well, that’s at least how I have gathered it works.

The Fidelity Money Markets are doing quite well right now: 4.65% as I write this today. (Symbol: SPRXX)

The T-Bills are paying at bit more at 5.2%, not a giant leap forward, but hey, half a percent is half a percent.

While this goes somewhat against my mantra of not needing to maximize the value of every dollar, I figured starting a treasury ladder at 4 weeks, 8 weeks, and 13 weeks.

The ladder works at getting you started right away with short term T-Bills and when they mature, you then purchase a new 13 week T-Bill. So eventually you’ll have T-Bills that mature every month keeping yourself from being locked in long term and getting new rates as they come up. Which is a big plus as the rate continue to creep in an upward trajectory.

The Treasury Direct auction will be happening in a few days and I’ll all signed up so will make another post after it goes through. That one will be for only the 4 weeks and is the shortest duration of my ladder to start this process.

I have really wanted to purchase a new rental (and is still my long term goal) but the rate of return for a rental is going to really need to be higher. If my near no-risk (one can never really call anything risk free) money markets and T-bills are paying 5 plus percent, I would want a 10 percent return minimum to take on rental risk. Sure I can also take write offs and depreciation, but I see equity prices coming down in the future, not up, so feel that there is a risk there also.

Until then will just bide my time.

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