Treasury Bond Buying Tutorial

Discussion of the Bond portion of the Permanent Portfolio

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sophie
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Re: Treasury Bond Buying Tutorial

Post by sophie » Tue Jul 03, 2018 7:52 am

Selling Treasuries can be a bit complicated and it depends on where you're holding them.

Treasury Direct: you can't sell them on the site. You have to transfer them to a brokerage account and then sell. I've never tried to do this as I only use this account for savings bonds.

Fidelity: Very easy! Expand the bond in the "positions" view and hit the "sell" button. There is no fee to buy or sell, but be aware that there is a bid-ask spread, so there is a cost involved. If you own, say, 10 $1000 bonds and want to sell 5 of them, take care to enter "50" in the sell amount as bonds values are calculated in $100 lots.

Other brokerages (Vanguard, Schwab) charge a fee to sell a bond. Especially beware of Ally Bank's TradeKing investment account, where the fees can be as high as $50 a bond (not the advertised $1) and apply to buying and selling.

Some brokers (Ally Bank's TradeKing) do not allow you to sell a bond online, only by phone. Vanguard and Schwab used to, but both now allow you to sell bonds through the website (per their website; I haven't tried it).
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Re: Treasury Bond Buying Tutorial

Post by HappyMan » Tue Jul 03, 2018 9:56 am

Thank you. Forgot to mention that I am with Schwab. Will check their fees.
sophie wrote:
Tue Jul 03, 2018 7:52 am
Selling Treasuries can be a bit complicated and it depends on where you're holding them.

Treasury Direct: you can't sell them on the site. You have to transfer them to a brokerage account and then sell. I've never tried to do this as I only use this account for savings bonds.

Fidelity: Very easy! Expand the bond in the "positions" view and hit the "sell" button. There is no fee to buy or sell, but be aware that there is a bid-ask spread, so there is a cost involved. If you own, say, 10 $1000 bonds and want to sell 5 of them, take care to enter "50" in the sell amount as bonds values are calculated in $100 lots.

Other brokerages (Vanguard, Schwab) charge a fee to sell a bond. Especially beware of Ally Bank's TradeKing investment account, where the fees can be as high as $50 a bond (not the advertised $1) and apply to buying and selling.

Some brokers (Ally Bank's TradeKing) do not allow you to sell a bond online, only by phone. Vanguard and Schwab used to, but both now allow you to sell bonds through the website (per their website; I haven't tried it).
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Re: Treasury Bond Buying Tutorial

Post by vnatale » Tue Mar 24, 2020 7:24 pm

Gumby wrote:
Tue Nov 01, 2011 11:39 pm
6 Iron wrote: I sold about 80% of my TLT today at the market open, and I have an internal conflict. With the bulk of my long bonds liquidated, I feel as if my left flank is uncovered as I have the three business days before I can buy bonds. On the other hand, and I realize that I am violating the code here, but, I am extraordinarily tempted to market time or dollar cost average my move back in.

What would you do?
When you covert your TLT to cash, you've effectively turned 50% of your portfolio into cash. So, a portfolio consisting of (roughly) 50% cash, 25% stocks and 25% gold probably isn't going to be all that different from a traditional 4x25 PP over the span of three days. That's because you've basically turned your portfolio into a version of PRPFX (which can't own very many Long Term Bonds). Actually, your portfolio will most closely resemble Clive's "Rate Tart" PP — which held up very well through 2008-2009. The only difference between the "Rate Tart" PP and the 4x25 PP was that the 4x25 PP recovered more quickly in Dec 2008, when the LTTs kicked in big time.

http://gyroscopicinvesting.com/forum/ht ... 730#p12730
(Keep in mind that Clive's comments are deleted from the "Rate Tart" PP discussion)

So, you can probably relax more than you think. But, my recommendation is still to buy your bonds sooner rather than later, since we may be experiencing some high volatility in the next few weeks as Greece appears to move closer and closer to its eventual default. Do what feels right, but know that it probably won't make a tremendous difference either way.


Can anyone make a case for a period of time when no one could write: "since we may be experiencing.....[due to]..]?


Vinny
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Re: Treasury Bond Buying Tutorial

Post by vnatale » Tue Mar 24, 2020 8:48 pm

moda0306 wrote:
Wed Mar 28, 2012 10:56 am
If anyone here has done a few Vanguard bond trades and would be willing to post a tutorial it would be MUCH appreciated by myself and others.
I read through all the posts here and I don't think anyone ever fulfilled his request.

Hopefully, before the week is over I will finally buy my first bonds ever - Treasury Bills with Vanguard. If I do do so, I'll probably just naturally document it which would enable this request to finally be fulfilled.

Vinny
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Re: Treasury Bond Buying Tutorial

Post by dualstow » Tue Mar 24, 2020 9:36 pm

I think you’re right, but things have changed since then anyway. Craig mentions Vanguard’s “Bond Desk” and I don’t think they even use the term anymore. You used to have to call to order bonds, hence the desk.

There’s some good info on page 8, beginning with Krieg’s post.

I would post a tutorial if i thought I could cover everything that a new buyer of bonds would like to do.
I only know how to do what I do, which doesn’t require a tutorial because it is so limited. (For example, I almost always use the auctions, not the secondary market).
I have always just clicked my way through it. It was easy.
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Re: Treasury Bond Buying Tutorial

Post by vnatale » Tue Mar 24, 2020 9:49 pm

dualstow wrote:
Tue Mar 24, 2020 9:36 pm
I think you’re right, but things have changed since then anyway. Craig mentions Vanguard’s “Bond Desk” and I don’t think they even use the term anymore. You used to have to call to order bonds, hence the desk.

There’s some good info on page 8, beginning with Krieg’s post.

I would post a tutorial if i thought I could cover everything that a new buyer of bonds would like to do.
I only know how to do what I do, which doesn’t require a tutorial because it is so limited. (For example, I almost always use the auctions, not the secondary market).
I have always just clicked my way through it. It was easy.
Using Vanguard?

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Re: Treasury Bond Buying Tutorial

Post by dualstow » Wed Mar 25, 2020 6:58 am

Yep
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Re: Treasury Bond Buying Tutorial

Post by Kriegsspiel » Wed Mar 25, 2020 7:30 am

Vinny I just took some screenshots, since I'm not sure if you've tried it before... In your brokerage, click on Buy and Sell, then Trade Bonds or CDs
v1.png
v1.png (35.57 KiB) Viewed 1310 times
Now, here it looks like Vanguard has changed it, because the quick search here used to go out to 30 years, not just 10:
v2.png
v2.png (33.45 KiB) Viewed 1310 times
But you can just click on Treasuries from that top menu:
v3.png
v3.png (16.98 KiB) Viewed 1310 times
v5.png
v5.png (32.12 KiB) Viewed 1310 times
v4.png
v4.png (78.45 KiB) Viewed 1310 times
Click the buy button, then say how many you want, and buy them. You can buy and sell less than the "min qty" but you won't get the advertised price/yield.
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Re: Treasury Bond Buying Tutorial

Post by jhogue » Wed Mar 25, 2020 8:48 am

Vinny,

Given all of the difficulties that you have described in multiple threads on this forum dealing with Vanguard over the telephone, I wonder if you would not be more satisfied establishing your accounts in-person at your nearest Fidelity brick-and-mortar office.

-Fidelity's headquarters is in Boston, but their satellite office nearest you is in Shrewsbury, about 45 miles from Montague, MA, tel.1-800-521-3026. You could call ahead, get an appointment, and outline all the changes you want to make.

-My general impression is that Fidelity's bond operation is more extensive than Vanguard's.

-The local office would certainly help you transfer and consolidated your accounts at Fidelity, and while they don't offer tax advice as such, I have found their representatives well-informed about state and local tax situations. Last time I used my local Fidelity office, they helped me establish a new Roth conversion IRA to avoid tax complications down the road.


You should also realize that you are attempting to move into the bond market at a moment of truly unprecedented volatility. Massive swings up and down on a daily basis have caught all the major brokerage firms trying to catch up with severe dislocations caused by enormous volumes of transactions and unanticipated liquidity issues. Stuff happens.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Treasury Bond Buying Tutorial

Post by vnatale » Wed Mar 25, 2020 9:16 am

Kriegsspiel wrote:
Wed Mar 25, 2020 7:30 am
Vinny I just took some screenshots, since I'm not sure if you've tried it before... In your brokerage, click on Buy and Sell, then Trade Bonds or CDs

v1.png

Now, here it looks like Vanguard has changed it, because the quick search here used to go out to 30 years, not just 10:

v2.png

But you can just click on Treasuries from that top menu:

v3.png

v5.png
v4.png

Click the buy button, then say how many you want, and buy them. You can buy and sell less than the "min qty" but you won't get the advertised price/yield.
Thanks for all of this! Yesterday I got caught up with "working from home" from 9 AM until about 6:30 PM so I could not get into my Vanguard account to see what you have put here because the broker said you could only see pricing when the market is open.

Vinny
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Re: Treasury Bond Buying Tutorial

Post by Kriegsspiel » Wed Mar 25, 2020 9:22 am

vnatale wrote:
Wed Mar 25, 2020 9:16 am
Thanks for all of this! Yesterday I got caught up with "working from home" from 9 AM until about 6:30 PM so I could not get into my Vanguard account to see what you have put here because the broker said you could only see pricing when the market is open.

Vinny
No problem. Keep in mind you can also only trade Treasuries when the market is open.
Some 5500 years ago, before writing was invented to record it, the people of the city of Hamoukar, near rich copper mines, were subjected to the first known instance of urban warfare when an army from the city of Uruk attacked and fought their way through the streets, killing most everyone.
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Re: Treasury Bond Buying Tutorial

Post by vnatale » Wed Mar 25, 2020 9:25 am

jhogue wrote:
Wed Mar 25, 2020 8:48 am
Vinny,

Given all of the difficulties that you have described in multiple threads on this forum dealing with Vanguard over the telephone, I wonder if you would not be more satisfied establishing your accounts in-person at your nearest Fidelity brick-and-mortar office.

-Fidelity's headquarters is in Boston, but their satellite office nearest you is in Shrewsbury, about 45 miles from Montague, MA, tel.1-800-521-3026. You could call ahead, get an appointment, and outline all the changes you want to make.

-My general impression is that Fidelity's bond operation is more extensive than Vanguard's.

-The local office would certainly help you transfer and consolidated your accounts at Fidelity, and while they don't offer tax advice as such, I have found their representatives well-informed about state and local tax situations. Last time I used my local Fidelity office, they helped me establish a new Roth conversion IRA to avoid tax complications down the road.


You should also realize that you are attempting to move into the bond market at a moment of truly unprecedented volatility. Massive swings up and down on a daily basis have caught all the major brokerage firms trying to catch up with severe dislocations caused by enormous volumes of transactions and unanticipated liquidity issues. Stuff happens.
Thanks for the above. I'm familiar with Shrewsbury as it is next door to where my first college is located (Worcester). However, rather than it being 45 minutes from me, it's at least 1 hour and 15 minutes, if not one hour and one-half from me. Boston would only be 15 minutes to half hour farther for me.

Part of the issue is that Vanguard's hours for business also seem to be the same times as my hours of "working from home". Once I can free up some "working from home" hours I can follow through with bond buying with Vanguard. And, initially, it is only strictly going to be buying Treasury Bills for cash in an attempt to mimic Treasury Bill money market fund. But one that IS 100% Treasury Bills.

I'd decided by last July 4, 2019 that I was going full Permanent Portfolio but other things kept getting in the way so that implementation never happened. I had plans for how I wanted to do the implementation. But I am, finally, making some baby steps towards implementation and am constantly learning new things via this forum and my interactions with Vanguard. But once I am fully implemented THE final step will be to then take 1/2 of what I have at Vanguard and put it with Fidelity.

Vinny
"I only regret that I have but one lap to give to my cats."
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