How To Buy T-Bills Direct From the US Treasury | Adam Taggart

foreign [Music] I'm wealthy I'm founder Adam Taggart I'm here with a quick explainer video for you about how to buy very short dated U.S treasuries known as t-bills directly from the U.S treasury using the treasury direct website as you know if you're a regular viewer on this channel I've been making a lot of noise recently now that t-bills are offering yields around five percent that's a very big development as investors who are concerned about today's financial markets now have somewhere safe to park their Capital keep it relatively liquid and get paid a decent return on it that hasn't been the case for a long time when your t-bill yields have been at record lows for much of the past decade down near zero percent for many years the last time they were this high was 2006 and with the inflation rate as measured by CPI falling it may not be very long before t-bills offer a positive real return When adjusted for inflation again that hasn't been the case for a very long time I can't tell you how many times I've had investors tell me I'm too spooked by the turbulence of today's uncertain markets if I could just find a safe place to get a four to five percent return on my money for the time being I'd be thrilled well that's now possible given where short-term yields are t-bills are a particularly attractive option right now for folks with cash sitting in bank or money market accounts according to bank rate as of the filming of this video the national average yield for savings accounts is just 0.23 percent it's pretty terrible while the FED has raised the federal fund fund rate faster than at any time in history over the past year most banks haven't followed suit they've been reluctant to raise their yields on savings accounts money market accounts and CDs even though the FED has been dramatically increasing the interest that Banks receive on excess reserves they're just keeping the difference to themselves for now rather than sharing it with their depositors I don't like that but for now they don't seem to care what I think and while you can find some banks mostly online ones offering more generous rates they still don't match what t-bills are offering right now and those lower rates also come with counterparty risk greater than that of owning a t-bill anyways it's been a while since I've done an explainer video like this and I've received a ton of requests for one showing how to purchase t-bills straight from the US government using the treasury direct website so you've asked and now I'm delivering it's a pretty straightforward and quick process but before I show you how to make a purchase let me just provide a little context first I'm going to show you how to buy t-bills but the same process can be used to buy longer duration U.S treasuries notes and bonds too I'm not going to go into the additional considerations you need to keep in mind when buying notes and bonds here in this video but if you'd like me to address them in a future video let me know in the comments section below if enough folks want me to I'll be happy to do it also I'm going to show you how to purchase t-bills using the treasury direct website you can also buy and sell them through a brokerage account I'm not going to show you how to do that in this video but again I can in a future video If enough you say in the comments that you'd like me to there are differences between using treasury direct versus brokerage platforms to transact in t-bills keeping it simple treasury direct gives you more options when purchasing them and brokerage accounts are more convenient when it comes to selling but for most people selling doesn't come into play very much because of the short duration that t-bills have in most cases you just let the bills mature and you get your full principal back at the end as a quick rule of thumb using treasury direct makes sense when you've got cash in the bank you want to earn a better return on I'll show you how to link your bank account to the treasury direct website and once that's done the treasury will pull the funds from your bank account to buy the t bills and then deposit the full amount back into the same bank account or another bank account of your choosing on the date that the bill matures if you have cash already in a brokerage account and you want to buy treasuries with them it's probably just makes more sense to buy the bills through your broker or perhaps maybe even using an ETF like bil for questions on how to do that ask your financial advisor or if you don't have one contact your broker directly again if you'd like to see me do another explainer video on how to purchase t-bills via a brokerage account let me know in the comment section below all right enough background let me show you what the process looks like using treasury direct it's so easy anyone can do it in just a couple of minutes first go to the treasury direct.gov website if you haven't done so before open an account by clicking this open a new account link over here and then clicking on the apply Now button down here then simply follow all the account opening instructions as prompted one pro tip here though the treasury direct website's a little clunky as a it's designed by the government and B it has a ton of security precautions in place one thing that takes a little practice to get used to is that you can't use your browser's back button if you do it logs you out of the website and you have to start over yeah it's a bit of a hassle but I guess it's worth putting up with if it keeps your money more secure okay once you have an active account at treasury direct then you want to go back to the home page and click the big blue treasury direct login button once you're successfully logged in you'll arrive at your treasury direct my account homepage click on the tab titled buy Direct now click on the Bills radio button and then click submit okay this is the page you'll use to tell treasury direct which T bills you want to purchase when you want to buy them and how much of them you want to buy first off let me specify that when you buy these t-bills from the treasury you're buying what are called new issue bills these are brand new bills that are being issued at auction and are different from the already issued ones that are being bought and sold on the open market you will be the first and in most cases likely the only owner of these new issue T bills T bills are sold according to their duration durations range from four weeks to eight weeks to 13 weeks to 17 weeks to 6 to 26 weeks and finally 52 weeks auctions for all but the 52-week T bills are held weekly auctions for 52-week t-bills happen monthly the table here shows you the treasury's upcoming calendar for t-bill auctions the auction date column tells you when the auction will happen so you'll have to place your order by the afternoon before this date the issue date is when the t-bill is actually issued into your treasury direct account now for those wondering what actually happens at an auction the big Banks and other large buyers actively build for the bill actively bid for the bills the treasury releases on that day that's a competitive process that sets the yield that regular folks like you and me will receive for that specific tranche of t-bills to get a sense for what yields on recent auctions have been scroll down here and click on the view recent auctions result link it pulls up this page that shows you the results of recent auctions you'll want to find the most recent auction for the duration you're interested in let's look at the most recent one for the four-week t-bills that were issued on March 7th 2023. you want to look over at the far right column titled investment rate that's the yield you would have received if you had bought T bills at this auction remember these are the results of the most recent auctions but they're no guarantee of the rate you'll get when you buy your T bills rates change from auction to auction usually not that much over a one week period but just know the yield for your T bills will be set by the auction that happens during the specific one that you participate in okay heading back to our purchasing page you simply click the radio button next to the type of t-bill and auction date you want here I'll select the four week t-bill auction happening on March 9th and then scroll down to the purchase amount field in that field enter the amount of those T bills you want to buy here I'll put a hundred dollars which is treasury Direct's minimum purchase amount FYI one advantage purchasing t-bills on Treasury direct offers is the 100 limit most brokerage accounts require a one thousand dollar transaction minimum when buying t-bills now make sure the bank account you want to use for funding the purchase is the correct one selected also make sure you've got sufficient funds within your bank account before attempting to make your purchase next determine whether or not you want your T bills to be reinvested when they come up for maturity reinvesting makes sense if you don't need immediate access to the money and expect yields to remain attractive treasury direct lets you keep reinvesting your T bills automatically for up to two years so select how many times you'd like your T bills reinvested or if you don't want them to be just select the no option here though I'm going to request my four-week T Bill be reinvested six times note that I can log back into this treasury account treasury direct account at any time in the future and cancel any future reinvestments if I wish finally you need to tell treasury direct where to deposit the proceeds once your t-bill matures and any reinvestment cycle is complete in most cases this will be the bank you had the funds withdrawn from but you have the option at any time to specify a different bank account to receive the funds should you wish after you've done that then all that's left to do in our example here is Click submit treasury direct then displays details of the confirmation of your purchase be sure to review the page carefully to make sure everything is as you expect and if it is then click the blue submit button and it's that easy a few days later on the issue date your new Tebow purchase will show up in your treasury direct account now in most cases you'll simply wait until the bill matures when it does it'll either be automatically reinvested as many times as you specified or when there are no reinvestments left the proceeds will be deposited in the bank account that you specified in terms of how the math Works here's how it goes with t-bills the treasury doesn't make any interest payments it simply sells the t-bill to you at a discount and then pays you the full principal of the bill upon maturity the difference from the funds you paid and the funds you receive is your yield here's a quick visual to help look at the recent results for the four-week t-bill auction on March 2nd 2023. if you'd bought a hundred dollars worth of these t-bills then the treasury would have charged you 99. 64 cents and three tenths of a cent for them when the bill matures four weeks later it will deposit the full one hundred dollars worth of face value back into your bank account in wrapping up here it's important to know that any gains you receive from investing in t bills are exempt from state and local taxes there are nuances that didn't have time to get into here in order to keep this video concise like how to sell a t-bill as I said earlier in most cases that won't be necessary as t-bills have such short durations you can just wait until your bills mature and get your full funds back but know that to sell any T bills you've bought through treasury direct you'll need to transfer them to your brokerage account in order to do so it's not a huge deal but if you think there's a good chance you'll want to sell your t-bills prior to their maturity you're probably better off just buying them through your brokerage account from the get-go okay does buying two bills right now make sense for you if after viewing this video you're still not certain talk to your professional financial advisor and get their take if you don't have a good one to ask then consider talking with one of the advisors Wealthy on endorses to get their opinion it's completely free and there's no obligation to work with them these are the same experts you see on this program with me every week to schedule one of those free discussions just fill out the short form at wealthyon.com and if you find these short explainer videos of value and would like to see more of them please let me know in the comments section below feel free to suggest any additional topics you'd like to see covered in a future video and if you want to see more of these please support this channel by hitting the like button and clicking on the red subscribe button below if you haven't already as well as that little bell icon right next to it thanks so much for doing that and thanks for watching thank you

Channel: Wealthion

Views: 113,766

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Id: svhJEWbOoPY

Length: 13min 12sec (792 seconds)

Published: Mon Mar 06 2023