No. of Recommendations: 4
A few possible strategies spring to mind:
(a) just always go 3 months out. (or 6, or whatever).
(b) pick 3 month or 1 year, whichever is the higher rate the day you are buying.
(c) either of the above, but staggered maturities with subsets of your cash
Instead I do:
(d) Buy all of them. Yes, I really buy every T-bill in various amounts. I also buy some 2-year notes, and some TIPS periodically.
This has a few advantages. The first advantage is time diversity. Every single week, twice a week, I have T-bills that mature, and every single week, twice a week, I buy new T-bills. That way, in any week that I have additional expenses, I simply invest a little less which leaves money to be used to pay those additional expenses (for example, one of my kids got married a few weeks ago, so for a few weeks there were substantial additional expenses and less money was put into T-bills, while more money went out to pay for wedding stuff. Another advantage is interest rate diversity. When rates change, I always end up owning some of the higher rate stuff, even if I also own some of the lower rate stuff. This gives a pretty reasonable average overall. For example, look at the 52-week T-bills recently - All the 2024 maturities yielded over 5% except for the last one, the 12/26/24 maturity yielded only 4.8%. The 2025 maturities began at around 4.8%, but then climbed over 5% for March through July, and then returned to the low 4's and even 3.9% for October, and now back up to the low 4's, the last one was 2.24%. A third advantage is that I can buy the "odd bills", they call them "Cash management bills" and they usually have slightly less demand and thus slightly more interest. For example, a few weeks ago there was this odd 33-day T-bill offered, and I bought a bunch of it, yield was 4.341%, and it is maturing on Tuesday. That yield was slightly higher than the 4-week T-bill and the 42-day (now they call it 6-week) T-bill with similar maturity date.
Is buying "all of them" overkill? Probably. But it's turned into a kind of hobby that takes 30-60 seconds twice each week. At first I started simply by buying only the 8-week T-bill and just rolling over automatically at Treasurydirect each week. But then TreasuryDirect really messed me up. One time I was unable to log in, and for some ridiculous reason, once you can't log in, they simply CANCEL all your reinvestments and allow the funds to mature into cash with zero interest. Since I had set it on autopilot (12 automatic reinvestments at 8 weeks each time means that I don't have to look at it for 12 x 8 weeks, or nearly 2 years. So I didn't worry about it. Ha! I should have known that anything operated by government or government related will end up screwing something up. Probably 11 or 12 months later, I finally managed to log in and to my horror discovered what they had done. Bastards. And they send ZERO communication via email and ZERO communication via US Mail. The only thing they send is a a notification that you have a message in your TD inbox, but I get those every week anyway for various things in the TD account. So there was no way at all to know that they stopped my automatic reinvestments randomly like that. Now I do the vast bulk of my T-bill buying in my brokerage account. TreasuryDirect also has literally the worst formatting of their 1099 that I've ever seen. And they alone don't have a requirement to send out paper 1099s to me each year. I have to log in, show their pizz poor 1099 on my screen, and then save it to pdf myself, and it still remains so ridiculously badly formatted. Any normal financial institution would be laughed out of the room if they presented a 1099 that way.
