No. of Recommendations: 9
This subtopic started on the index board but is a better fit here. Below is my post thanking TroySR71 for providing a link to instructions on how to buy treasuries on third party brokerage sites, in my case Vanguard.
Thank You Troy. That link provided exact and detailed steps to take with Vanguard. I just navigated Vanguard and the description matched the website exactly. I successfully entered an order to buy a $25,000 one month bond to get a feel for the process. It settles on 02-28 and matures on 03-28. The estimated yield was 0.2% higher than the money market where my cash is currently parked. After completing this round trip, I will make a bigger buy in April.-----------------------
OK, so I completed my purchase and learned a few things I thought I would share here for any help it might provide to first time treasury buyers like myself. I called the Vanguard fixed income desk to clear up certain questions and I will include their clarifications as I go.
My order filed on 02-23, the date of the auction. I bought a four week, $25,000 T-bill and my settlement account showed a debit on 02-23-23 for $24,912.51 to pay for it. That was earlier than the settlement date. Vanguard assured me the money was still in my MM account, earning MM interest until the 02-28 settlement date.
The bond shows up now in my portfolio and is described as "25,000.0000 shares of U S TREASURY BILL 0% 03/28/23 11/29/22 at $99.65".
What's that 11/29/22 at $99.65" about? I was advised by Vanguard that the Treasury often fill orders with existing bonds even though I was ostensibly ordering a new bond to be issued at the 02-23 auction. In my case they assigned a bond originally issued in Nov 2022 that still had four weeks to mature on 03-28-23. The price I was charged was calculated to delver the yield determined by the 02-23-23 auction.
I did the math on $87.49 interest on my purchase price for 28 days and it came out to 4.594%. I looked on this website,
https://www.treasurydirect.gov/auctions/announceme...and it confirms the 4.594% for the four week note.
So the actual rate I received at auction was quite a bit lower than the 4.75% estimated yield I got when I placed the order. The current 7 day SEC yield on the MM I use as of yesterday is 4.52% so by the time the T-biil is issued next Tuesday, the MM may very well be paying more than the T-bill.
My experiment to juice the MM yield by going into T-bills so far is a big fat meh. YMMV.
