I now have 4 consecutive 4-week Treasury Bills as a ladder, so next week one will mature and I will buy another 4-week T-Bill the same day with the proceeds. I’ll keep this rotating money as my emergency fund until the rates are non-competitive. For now, I’m averaging the equivalent of a 4.5% bank APY with only slightly less liquidity.
(For the history on me building this T-Bill ladder, please read the entries in my Treasury Bills Category)
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hmmmm….very interesting, maybe I should review my asset allocation again and put some of my emergency money to bonds…on a different note did you create a javascript page to track your current and future goals?
Now the question is, can you completely automate the ladder or not? Given you don’t mind the proceeds lingering in the C of I and given you want to continue reinvesting matured funds, can you avoid logging on the TD web site every week and managing your account manually?
correct me if I’m wrong, but I thought you could deposit the resulting funds back into your banking account?
Vlad,
If you don’t mind the small amounts lingering in C of I, then yes it can be fully automated. Just select the repeating investment option and the appropriate time interval and then set both the source and destination as C of I. I’ve got mine scheduled to automatically reinvest through April, actually, so technically I guess I don’t have to look at T.D.’s website again until then.
I don’t think T.D. lets you scheudle C of I transactions before the money’s already in there. This would be nice, as it would allow you to schedule a sweep of the small amounts collecting in your C of I to your checking account without having to log on. But maybe there will be a repeating option for C of I too? I won’t really know until I get some money in there. If anyone reading this had already scheduled to redeem C of I, maybe they’ll post with info?
A couple other possibilities to avoid having to log on to grab the small amounts of interest leftover after reinvesting:
1. Use an interest-bearing checking account in place of C of I, but maintain your purchase amount there (probably not preferable since the interest would be so low there, although I think Presidential’s checking had a good APY)
-or-
2. If you’re making less frequent reinvestments than every week, you could use a hi-yield savings account in place of the C of I. But you’d also have to watch the # of ACH transactions each month to stay below the limit of 6.
Personally, I think for weekly reinvestments I’m just going to leave the small amounts in the C of I until I get around to logging on. I have some less frequent transactions (like 6-mo T-bill every two months) that I’ve got scheduled to and from my Emigrant Direct account instead.
Good luck!
Dan
I was just reviewing the recent Treasury Bill auction results and noticed a 7-day entry with a rate of 4.140%. Do you know if the 7-day T-Bill is new or something you can only get in the bank?
http://wwws.publicdebt.treas.gov/AI/OFBills
Neo
Why not ladder the 182 day bills? They have the best rate of all and you could still ladder them effectively.
6-month T-Bills give you less liquidity in return for higher returns. I wanted this to be my emergency fund, so I wanted maximum liquidity.
I am considering switching to 6-month T-Bills though due to the rate difference.
7-day T-Bills are offered at different times, according to their schedule. They not not offered every week like 4-week Bills.
Or, you could just open a high-yield savings account and save yourself a lot of work. HSBC is currently 4.25%.
Rate on 4 week bill down to 3.553% this week 12/19) which is down from 3.630% which is down from 3.813% before that. Moved my maturing 4 weeks bills to 13 weeks this week. 91 day paying 3.988 this week. Up from 3.911 last week.