That’s it. You’ll get an e-mail from the U.S. Treasury that gives you a onetime passcode; enter it when prompted, and you’re in. Hit the BuyDirect button to make purchases; check your purchases under Current Holdings. You can only buy onauction dates, which occur regularly. Noncompetitive bids must be received before 11 a.m. on auction day.
A strategy for rising rates: Laddering
One problem with buying an interest-bearing security is that you’re locking in current rates for a period of time — say, a year. Your biggest worry: Rates will keep rising after you’ve locked in. Powell has indicated that he will continue to raise interest rates to squash inflation.
How do youavoid yield regret? With a ladder. For example, suppose you have $1,000 you want to invest. Take $250 and invest it in a one-year T-bill at the next auction date. Do this every three months afterward. After a year, you’ll have one T-bill maturing every three months. Did rates keep rising after your first purchase? You would have caught the rise with the next purchase.
Another strategy: Invest the entire $1,000 in three-month T-bills. Every three months, reinvest $250 of the three-month bills into a one-year bill. At the end of the year, you’ll have four one-year T-bills, with one maturing every three months.
Currently, the four-month T-bill is the highest-yielding investment among bills, notes and bonds. This is not normal: Typically, the longer you tie up your money, the higher the yield. At least at the moment, it doesn’t make sense to tie up your money for, say, two years at a lower yield than what you could get for four months.
You can use the laddering strategy for bank CDs also, but banks currently aren’t offering one-year CDs with rates as high as a one-year T-bill. Banks typically don’t raise their savings rates as fast as they raise their borrowing rates. CD rates may catch up with T-bills eventually..
John Waggoner covers all things financial for AARP, from budgeting and taxes to retirement planning and Social Security. Previously he was a reporter forKiplinger's Personal Financeand USA Today.
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