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I am looking for places to invest cash.
I have some CDs at a local bank
I just reviewed the contents of the treasurydirect.gov web site.
Is there a place I could compare returns (interest rate) of a 13 week
treasury bill vs a 90 day CD?
Same thing- 2 year CD vs a 2 year treasury note?
If I compare a 5 year CD to a 5 year TIP or to a 5 year Ibond, would
that make sense?
The treasurydirect site did not appear to have "current rates" the
same way my bank published current CD rates on the web. Is there a
reason for this.
I have never owned bonds directly (only bond mutual funds). Any
comments to this effect would be appreciated.
jIM <n...@h...com> writes:
> If I compare a 5 year CD to a 5 year TIP or to a 5 year Ibond, would
> that make sense?
Not really. They all have very different tax treatment.
The i-bond has effective tax deferral. The CD and the TIPS
only get tax deferral if you buy them in an IRA. In a
taxable account, the TIPS are the messiest - they throw off
current income based on the "real" yield, but every year,
you owe taxes on the inflation adjustment to the principal
as well as the coupons.
All three are backed by the government (assuming the CD
is at an FDIC insured bank and below the limits).
CDs are taxed at both the federal and state level.
> The treasurydirect site did not appear to have "current rates" the
> same way my bank published current CD rates on the web. Is there a
> reason for this.
They update the current rates on the i-bonds on the first
day in May and November. They just adjusted them from
having a real rate of *zero* to a real rate of 0.7%. Yech.
(The yield on them is adjusted every six months to a
combination of a fixed real rate plus an inflation
adjustment. The fixed real rate you get on them is locked
in the day you buy them. Folks who bought them 8 years ago
locked in real rates of 3+% - in addition to the same
inflation adjustment that every i-bond gets).
I'm hard pressed to see the current real rates on i-bonds
as very attractive.
As far as the rates on TIPS (and on regular treasury bonds) -
they move every day, since there is an active secondary
market for them. There isn't such a market for i-bonds, so
they are whatever rate the Treasury say they are.
Which is why there is no "quote" page for treasury bonds
on the treasury direct site. The treasury doesn't set the
rates. The market does.
When you as an individual buy from Treasury Direct, you
submit a "noncompetitive" bid which gets mixed in with the
normal treasury auction. Whatever price the auction ended
up with for the competitive bids (ie. huge instititional
buyers), the noncompetitive bids get settled at as well.
You end up piggy backing on the big boys bids, but you
don't really have control over the price (and therefore
the yield) you'll get. You can see the final prices and
yields from the most recent auctions here:
http://www.savingsbonds.gov/RI/OFNtebnd
This page explains how the bidding process works:
http://www.savingsbonds.gov/instit/auctfund/work/wor
k.htm
Bloomberg also has a pretty good and up-to-date market data
page with treasury and tips yield curves:
http://www.bloomberg.com/markets/rates/index.html
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Bread- thank you for reply.
It did not appear there was enough information on the sites you linked
to for me to change from CDs to treasuries.
I currently keep my emergency monies in 90 day CDs. I have 3 90 CDs
in a ladder with one CD maturing every 30 days.
I was considering moving this to treasuries or something similar, but
the "rolling over" portion of the process (where CDs rollover into
another CD) does not appear to work with treasuries (if I were to get
a 13 week tbill). The 1.5% rates I am getting on the CDs appear
better than what the treasuries will yield, with less time to maintain
month to month.
On Nov 4, 1:39 pm, jIM <n...@h...com> wrote:
> The 1.5% rates I am getting on the CDs appear
> better than what the treasuries will yield, with less time to maintain
> month to month.
1.5%? You can do _much_ better with an online savings
account and you'd be 100% liquid.
http://www.money-rates.com/savings.htm
Anoop
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