No. of Recommendations: 4
I'm curious about your choice to use T-Bills over simply earning interest on cash balance at IBRK. Looks like T-Bills earn about 0.5% more (~4.25% vs. 3.75%, so I guess if you're sitting on a lot of cash, that can be significant. But is that the only reason you go through the hassle and complexity of buying and rolling T-Bills?
Interactive has good rates but there's no interest on the first $10,000. It looks like they are currently paying 3.83% on amounts over $10,000, presuming you have net asset value over $100,000. So for a cash balance of $100,000, you would get a blended 3.45% in interest. For short periods of time, it's probably not worth bothering with T-bills for the difference, but if you're waiting for a big market drop, it might end up being a long time you're getting almost 1% less in interest.
Another alternative that I have been using, for the same purpose, is a bond ETF (HSUV), which you can buy on Interactive Brokers, although I don't know whether this particular product is available outside Canada. It invests in high-interest U.S. dollar deposit accounts with Canadian chartered banks, and accumulates the interest, effectively converting what would be interest income into a capital gain for the holder of the ETF. Current gross yield is 4.13%, from which you have to subtract the 0.2% management fee, so 3.913%, but with the advantage of this not being income for tax purposes. SGOV is another ETF that looks like it is similar, investing in treasuries of less than 3 months' duration, with a yield of 4.23% (after deducting its low expense fees (0.09%).
