Thanks for visiting our personal finance channel! We hope this free content will help fast-track your financial journey! Everyone's financial journey is different. Please note that there are questions/ comments which I will not be able to answer without fully understanding your financial, personal & other circumstances. >>WATCH NEXT ⭐ Brokered CDs vs T-Bills: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-zhEiyW2N7KE.html ⭐ T-Bill Rates, Pricing & Interest | High Rate vs Investment Rate: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-keerkA4XaIk.html ⭐ T-Bill Auction Schedule | When You Can Buy New Issue T-Bills: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-xZr6EWkVJw0.html ⭐ China & The Fed Are Dumping Treasuries - Should You: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-Ywlr0JiTZMk.html ⭐ T-Bill Must-Knows: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-jIBn3VFkDw8.html ⭐ I Bought A $60,000 T-Bill Ladder: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-__oqvdtLoiE.html
My New $60,000 T-Bill Ladder (How To Build A T-Bill Ladder | Bond Ladder | Treasury Bills 2023) ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-4gaDsNYlxA8.html
So happy to have you back Jennifer! I’m hoping you do a video on what’s Happening with T Bills. If it’s a good time to transition into longer terms, 26, 52 week yet? Or do you think T Bill interest rates will continue going up! I’m kinda afraid of locking into a 13, 17, or 26 week T Bill and having the rates lower when they mature. I very much value your opinion. Thank you for all you do! 🙏🏻❤️🎅🤶
A 13 week new issue T-bill is often a deceptively better investment than a 4 or 8 week for 1 main reason - and that is the extra days your money has to 'wait' before the T-bill 'activates'. with 4 and 8 week T-bills, your money goes in Wednesday at the latest so you have funds to bid on Thursday morning auctions, which then 'settle' the following Tuesday - the starting date for the 4 or 8 week period. So your money is actually occupied in this investment since Wednesday of the previous week! This has the effect of reducing a 3.8% APY on a 4 week bill to a 'real' APY of ~3.1%. An 8 week bill is less effected because those 6 extra days are a smaller fraction of the total term, but can still reduce ~4% to ~3.6-3.7% (please do your own math, only for illustrative purposes). Starting with 13 week T-bills, the number of additional days your money is waiting for the term to begin goes down from 6 days to 4 days. Combined with the longer term, the 4 days becomes a very small 'penalty' on your 'real APY'. For this reason, T-bills, especially beginning around the 13 week term, have an invisible (unpublished) advantage over 4 and 8 week bills in terms of APY, at least when bought from most brokers. Not sure about how this waiting period works on treasury direct, but I suspect it is the same. TL;DR: "Actual" term of the following T-bills: 4 week - 34 days (6 additional days) 8 week - 62 days (6 additional days) 13 week - 94 days (4 additional days) You may or may not avoid this issue by 'renewing' your shorter term T-bills using the money from your maturing T-bills, but am not sure. Sorry for the long tangent. Getting back to your question, nobody knows for sure where rates will go, but the fed has suggested that rates will continue to rise in 2023, albeit at a slower rate than it has in 2022. The most recent 0.5% hike is likely to 'kick in' to treasury bill rates about 2 weeks after the hike based on history, but again not a guarantee. Nobody can make your decisions for you of course, but using objective data such as this may help you in your decision. 13 week or longer MAY make sense regardless due to the reasons discussed in length above.
Thanks Debra. I think you may have already seen this video but in case you haven’t, here’s my latest thinking on T-Bills. My New $60,000 T-Bill Ladder (How To Build A T-Bill Ladder | Bond Ladder | Treasury Bills 2023) ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-4gaDsNYlxA8.html
@@simplefinance thank you so much for that explanation! Really helpful. There’s more to buying TBills than I knew. I’m learning a lot. I’m wondering when I buy T bill through fidelity if I choose the rollover option if we don’t have those waiting days with no interest?
@@debrabullion3766 Another commenter on either this video or another has suggested that the 'rollover' feature some brokers offer can avoid the additional waiting days inbetween T-Bill maturity dates. Can't promise you this is accurate, so please do your own double checking!
Ive been laddering schwab and chase brokered cd's for a while now. It's a great way to maximize the fixed rate portion of my portfolio. I'm certain many people will benefit from this guidance. I just found your channel and immediately subscribed. Thanks for the info.
We have our IRAs, 401k and brokerage account at one firm. Is there any advantage of splitting it up between different firms like Schwab, Fidelity and/or Vanguard?
I like keeping my stuff in one place if I can to make my financial life simpler (others may do it differently). Either way, just make sure you stay under the SIPC limit. Here's more info on that: www.sipc.org/for-investors/investors-with-multiple-accounts
One advantage is if you like to buy stks during very high volatility days like with the vix at 40 some brokers bog down with all the traffic. So if your order is not going thru at one broker you can try using your other one. An example is Chase was very slow during the Oct 15 bottom this yr, hate to see it when we really have an active crash.
Hello Jennifer. Question - would there be a benefit to doing an in-service rollover from my 401k (fidelity) to my IRA account (vanguard) ? I feel like I’m losing out on some benefits of self directing my retirement funds compared to the options I have in the 401k. I realize this is a multi-faceted question, but would appreciate your thoughts anyway (even from a ten thousand foot view). Thanks!
Thanks for the great explanation! Once when the CD matures and rollover is not checked, does the principal and interest automatically be added back to my Cash & Cash Investment account?
What is the secondary mkt n why does Schwab charge? If I want to buy a cd at Schwab n have an account, and there are no new issues I want then I would have to buy in the secondary mkt. Does that mean they would have to get those CDs from another broker? Confused. At TD Ameritrade I didn't have to pay a commission.
The secondary market example. I buy a six month cd and in one month need the money. I sell the cd with 5 months to maturity to get my money. You or someone else buys it from me. The brokerage charges for the arrangement.
I bought cds with schwab but didn’t check the blue sky warning. Is there a way to check that after the fact? Or would they not have gone through if issue?
Hello this is Mary Ann from South Jersey I called Charles suave today to tell them did I close out my CD Schwab's they would have no problem with my plans to invest in the stock market and in the next few days come to their office and they will fill my stock market and bond request the man from suave was very pleasant and very helpful thank you for helping me make my investment for me and my daughter that we have a better understanding of what will transpire in a couple of days I can't thank you enough for your information❤
I'm looking at 1 year CDs, and I see one that holds the principal for 1 year and 3 months. Do I earn interest on the extra 3 months that the bank is holding the money for? The coupon frequency is listed as Semi-Annually, so I am worried that the 3 months is less than that. And how do I see how often the interest is compounded? Is it compounded daily or monthly? Thanks!
Hi, Diamond. I followed this video and I purchased my first 25K CD at Schwab today. I think i did something wrong because immediately after my purchase i am $35 down. Talking about money preservation.
Hello Jennifer, thank you for this very informative tutorial. I would like to ask a question. I'm a US citizen but will be moving to another country. Will I be able to purchase CD's if I don't have a US address? I would really appreciate if you could respond. Thank you
Thanks for this video. My account will be transferred from TD Ameritrade to Schwab in a few weeks. This video helped me see what I should expect as a Schwab CD customer.
I have my 401K at Schwab. I have $40K in the cash account, which I think is too much. Can I use say $30K to buy brokered CD's in my 401K, or does that not make sense? I'm in North Carolina so have around a 5% state income tax.
I believe brokered CDs pay "simple" interest. Bank CDs pay "compounding" interest meaning you earn interest on interest you earned and principal. Do you earn little more with brokered CDs than with bank CDs?
Brokered CDs typically pay more than bank CDs - this video explains brokered CDs in greater detail: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-zhEiyW2N7KE.html
I just discovered your channel And subscribe to it, I recently opened my Charles Schwab account and I do not know what I'm doing so I really appreciate all of this helpful information. I will be watching many of your post thank you for sharing your knowledge
do you verify somehow that interest payments are being made timely? When I have looked at History or investment income, they don't appear to be the same nor do they appear to be as much as I expected. I will say that calling the 800 number always gets me a very helpful friendly helper. But I gather that there is no part of the website where you can monitor your holdings and interest or dividends paid to quickly verify you're getting your yield. Perhaps an app is the answer?
I'll just add that people with Ameritrade will become Schwab sometime in the next year or two (I believe during 2023). Also, be careful to also calculate any number of days where you put your order in that your money has to be in your account before the CD 'kicks in'. If you get a 1 month CD but your money has to be in your account 4-6 days ahead of time, that's 4-6 days of extra time you need to calculate to get the real APY. On a 1 month CD, 4-6 days can reduce your APY by ~0.5% - 1%. I don't know why this isn't talked about more! This is true at least for 4 week treasury bills on Ameritrade for me. I have to have my money in my account by ~Wednesday evening at the latest to 'bid' on the 4 week treasury bill which gets sold on Thursday, but actually the 4 week term starts the following Tuesday. That's 6 extra days! I did some quick math and a 3.8% treasury bill becomes ~3.1% when you consider the extra 6 days it takes to earn the (face value - price paid). Be careful buying very short term fixed income investments! The extra 4-6 days won't effect longer term fixed income investments as much because it'll still be 4-6 days which will be a smaller percentage of the total term. And I'm not sure about 'rolling' investments where you can get back to back fixed income investments with the proceeds from the previous. Can anyone confirm or add details to this? Am I wrong here?
@John Smith It only takes a couple days to transfer your tax acc and a week to transfer an IRA. Was a pretty simple transfer.. I did hear Feb is when auto transfers will start. I hope it goes smoothly and Schwab doesn't bog down with issues or overcrowding, slowdowns during market volatility.
Good point, I never think about it like that. I guess to avoid that, you can do 1 year CD with 3 months increments, so the shortest duration one is 3 months and the error for 4-6 days holding period is relatively small. I started my CDs ladder with 1 month increments and up to 6 months. So only the very first part of the ladder has this problem, once the first 1 month is due and it will get rolled over to the 6 months one. Now the interest rate has been rising steadily, I extend the ladder to 1 year instead. When Fed pauses, I will extend the ladder further.
I agree. They deduct it on the auction day but it takes several days for the cd or t-bill to be issued. A four day free interest for someone. I have read somewhere in comments that if you do automatic rollover it eliminates this problem, but I don't know if that is true. The money should be left in your account until issue day IMO. While a much lower rate, at least you would earn interest in your fixed account.
I work at a large OSJ that supervises accounts from both Schwab and TD Ameritrade. I was told that the full switch over will take place around the end of Q3 2023.
I love your videos! I think I prefer to buy t-bills in my Roth account. I wasn't very clear if that is an advantage or not. Also, please send me the link if you have done a video on how to dollar cost average in the S&P and if you would do that now. Thank you so much! I tell everyone that will listen about your videos!
Generally speaking you may want to put the more risky portion of your portfolio in your Roth due to the potential for tax free gains. But I get it, you don't want to lose your Roth either since you've already paid the tax there.
Roth and IRA are tax deferred, which negates the tax benefits of treasuries over CDs (the elimination of state taxation). Thus, in my taxable account I prefer treasuries, but in my Roth (and IRA) I choose CD or treasuries- whichever yields more - so long as the CDs are FDIC and the terms are acceptable.
Hi I watch all your videos.I bought brokered CDs at Fidelity.It’s Xmas time so no one can answer my questions.Do Fidelity charge to buy brokered CD?Thanks
@@DiamondNestEgg thanks so much.I only bought new issues.You are truly awesome.On Fidelity I saw treasuries 3 months paying 4.476 3rd party price 98.59.I take it it’s secondary market.There are some paying 4.497 price 98.572.do you think this is cheaper price than treasury auction? Thanks
If I try to buy a cd that is prohibited (like Ohio in this example), will Schwab or the bank recognize it and stop it? Thanks for another great lesson.
i have a question about I-bonds. If i invest into saving i-bonds, and pull it out after 5 years vs 30 years at it maturity date, is there a difference? I mean would there be a charge fee? for pulling out before 30 years but after 5 years?
I reached this after watching this channels videos on I-bonds. After 5 years there is no penalty. Prior to 5 years you are penalized 3 month's interest.
I bought 4 brokered CDs from Schwab but my monthly statement only gives me the current market value of the CDs, not the actual value because I am going to hold the CDs until maturity. Is there a way to see the actual value each month from the Schwab website?? Thanks
DTC stands for the Depository Trust Company. The short answer is if the CD is DTC eligible you can likely transfer it to another broker without having to redeem it, like you can do with stocks and ETFs.
@@DiamondNestEgg Thanks. I spoke to Schwab support via chat and I was told that there is no way to get alerts specific to a treasury item reaching maturity. I'll just track these assets on an external calendar.
I wonder if I'll die before I mature? Probably not. I used to buy brokered CDs about 5 years ago in my taxable account. I had a bunch of them and I ended up listing each one on my 1040. Not sure if I could have bunched them? Do you know?
@@supersteve8305 No. they listed them separately, so that is how I filed it. It was the same with the Lending Club. I probably could have done them as one, but I didn't want to end up in IRS jail.
Personally, not at the moment, but my circumstances may be different from yours. I have various brokerage accounts primarily for the purpose of this channel (e.g. to make tutorials, test things out, etc)
