5.15.2018

My T-Bills "sweep" strategy

The old (very old) paper TBill - now all digital! But The above image is cooler than the following!


The entry page for TreasuryDirect


Treasury bill

What is a Treasury Bill:

Treasury bills (or T-bills) mature in one year or less. Like zero-coupon bonds, they do not pay interest prior to maturity; instead they are sold at a discount of the par value to create a positive yield to maturity.

Regular weekly T-Bills are commonly issued with maturity dates of 28 days (or 4 weeks, about a month), 91 days (or 13 weeks, about 3 months), 182 days (or 26 weeks, about 6 months), and 364 days (or 52 weeks, about 1 year). Treasury bills are sold by single-price auctions held weekly. Offering amounts for 13-week and 26-week bills are announced each Thursday for auction, usually at 11:30 a.m., on the following Monday and settlement, or issuance, on Thursday. Offering amounts for 4-week bills are announced on Monday for auction the next day, Tuesday, usually at 11:30 a.m., and issuance on Thursday. Offering amounts for 52-week bills are announced every fourth Thursday for auction the next Tuesday, usually at 11:30 am, and issuance on Thursday. Purchase orders at TreasuryDirect must be entered before 11:00 on the Monday of the auction. The minimum purchase, effective April 7, 2008, is $100. (This amount formerly had been $1,000.) Mature T-bills are also redeemed on each Thursday. Banks and financial institutions, especially primary dealers, are the largest purchasers of T-bills.
Comments:

  • My strategy is not technically a "sweep" account because it is not automatic!
  • The question I ask: "Am I likely to need the cash in my savings account in 30 days?" If no ... buy a TBill
  • TBill rates

  • I'll probably build a ladder that may take this form:
  • The key: Buy at a discount to coupon value ... redeemed at coupon value. The interest gained is the difference.


The logon look:


The ladder look:

My "toe in the water" initial investment(s) are all 4 weeks. I expect that going forward I will avail myself of the 13 weeks, 26 weeks, and 52 weeks TBills

The Purchase page:


My experience so far is A+. The website is fast and EZ to use. I called customer support once and they answered quickly and were helpful. I doubt I will need to call them again.




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