Negative 1 and 3 Month Treasury Rates

Discussion of the Cash portion of the Permanent Portfolio

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ochotona
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Re: Negative 1 and 3 Month Treasury Rates

Post by ochotona » Thu Mar 26, 2020 7:27 am

jalanlong wrote:
Wed Mar 25, 2020 8:52 pm
Tortoise wrote:
Wed Mar 25, 2020 8:28 pm
jalanlong wrote:
Wed Mar 25, 2020 7:29 pm
If Tbill rates stay negative I could just keep that 25% in cash in the brokerage account uninvested.
By “uninvested,” you mean invested in your brokerage account’s settlement fund, which I believe is generally some kind of money market fund. Might want to look under that hood.
I don’t believe so. I use M1 Finance as my broker. Any uninvested cash just sits in the account. I looked and it offers no interest. I don’t believe they sweep cash to any fund.
Yes but they don't pile up paper currency on your behalf. It's going to be in Money Market assets not Treasuries, not FDIC bank deposits, and they keep the interest... Like Schwab.
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jalanlong
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Re: Negative 1 and 3 Month Treasury Rates

Post by jalanlong » Thu Mar 26, 2020 8:00 am

ochotona wrote:
Thu Mar 26, 2020 7:27 am
jalanlong wrote:
Wed Mar 25, 2020 8:52 pm
Tortoise wrote:
Wed Mar 25, 2020 8:28 pm
jalanlong wrote:
Wed Mar 25, 2020 7:29 pm
If Tbill rates stay negative I could just keep that 25% in cash in the brokerage account uninvested.
By “uninvested,” you mean invested in your brokerage account’s settlement fund, which I believe is generally some kind of money market fund. Might want to look under that hood.
I don’t believe so. I use M1 Finance as my broker. Any uninvested cash just sits in the account. I looked and it offers no interest. I don’t believe they sweep cash to any fund.
Yes but they don't pile up paper currency on your behalf. It's going to be in Money Market assets not Treasuries, not FDIC bank deposits, and they keep the interest... Like Schwab.
What do I care what they are doing with my uninvested funds? Of course they could fail, that is a risk. My thoughts are that if I put $100 in an ETF like Bill or GBIL, I may very likely end up with $99 at the end of the month or year with negative short term rates. But my $100 uninvested is still $100 assuming the brokerage doesn't fail and SIPC insurance cannot cover it.
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pugchief
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Re: Negative 1 and 3 Month Treasury Rates

Post by pugchief » Thu Mar 26, 2020 8:23 am

jalanlong wrote:
Thu Mar 26, 2020 8:00 am
ochotona wrote:
Thu Mar 26, 2020 7:27 am
jalanlong wrote:
Wed Mar 25, 2020 8:52 pm
Tortoise wrote:
Wed Mar 25, 2020 8:28 pm
jalanlong wrote:
Wed Mar 25, 2020 7:29 pm
If Tbill rates stay negative I could just keep that 25% in cash in the brokerage account uninvested.
By “uninvested,” you mean invested in your brokerage account’s settlement fund, which I believe is generally some kind of money market fund. Might want to look under that hood.
I don’t believe so. I use M1 Finance as my broker. Any uninvested cash just sits in the account. I looked and it offers no interest. I don’t believe they sweep cash to any fund.
Yes but they don't pile up paper currency on your behalf. It's going to be in Money Market assets not Treasuries, not FDIC bank deposits, and they keep the interest... Like Schwab.
What do I care what they are doing with my uninvested funds? Of course they could fail, that is a risk. My thoughts are that if I put $100 in an ETF like Bill or GBIL, I may very likely end up with $99 at the end of the month or year with negative short term rates. But my $100 uninvested is still $100 assuming the brokerage doesn't fail and SIPC insurance cannot cover it.
Do yourself a favor and buy a treasury only money fund with the idle cash. I had some cash at a broker in 2008 where the sweep fund was the Reserve Fund. The broker didn't fail, but Reserve did. It took months to get access to the money and I got something like 80 cents on the dollar with no interest.
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ochotona
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Re: Negative 1 and 3 Month Treasury Rates

Post by ochotona » Thu Mar 26, 2020 8:31 am

pugchief wrote:
Thu Mar 26, 2020 8:23 am
Do yourself a favor and buy a treasury only money fund with the idle cash. I had some cash at a broker in 2008 where the sweep fund was the Reserve Fund. The broker didn't fail, but Reserve did. It took months to get access to the money and I got something like 80 cents on the dollar with no interest.
Seconded. I got caught up in this debacle at Schwab in 2008. It was promoted as a safe, cash-like alternative. I even wrote checks off of it! Wow, did I feel brilliant. Until I got stabbed.

As you might have heard, the largest bond fund at Charles Schwab (Nasdaq: SCHW), YieldPlus, is plunging in price. Suffering from massive redemptions, of the vast majority of its assets, it was forced to sell illiquid mortgage-backed securities at distressed fire-sale prices. As a result, the fund cratered from $8.79 at the end of February to $7.17 at the end of March - a fall of more than 18% in one month - and is now trading at just $6.85. That's a really nasty year-to-date loss of 24% for an ultrashort bond fund which opened the year at $9.01 a share.
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technovelist
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Re: Negative 1 and 3 Month Treasury Rates

Post by technovelist » Thu Mar 26, 2020 8:47 am

ochotona wrote:
Thu Mar 26, 2020 8:31 am
pugchief wrote:
Thu Mar 26, 2020 8:23 am
Do yourself a favor and buy a treasury only money fund with the idle cash. I had some cash at a broker in 2008 where the sweep fund was the Reserve Fund. The broker didn't fail, but Reserve did. It took months to get access to the money and I got something like 80 cents on the dollar with no interest.
Seconded. I got caught up in this debacle at Schwab in 2008. It was promoted as a safe, cash-like alternative. I even wrote checks off of it! Wow, did I feel brilliant. Until I got stabbed.

As you might have heard, the largest bond fund at Charles Schwab (Nasdaq: SCHW), YieldPlus, is plunging in price. Suffering from massive redemptions, of the vast majority of its assets, it was forced to sell illiquid mortgage-backed securities at distressed fire-sale prices. As a result, the fund cratered from $8.79 at the end of February to $7.17 at the end of March - a fall of more than 18% in one month - and is now trading at just $6.85. That's a really nasty year-to-date loss of 24% for an ultrashort bond fund which opened the year at $9.01 a share.
I assume that is from 2008?
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jalanlong
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Re: Negative 1 and 3 Month Treasury Rates

Post by jalanlong » Thu Mar 26, 2020 8:49 am

ochotona wrote:
Thu Mar 26, 2020 8:31 am
pugchief wrote:
Thu Mar 26, 2020 8:23 am
Do yourself a favor and buy a treasury only money fund with the idle cash. I had some cash at a broker in 2008 where the sweep fund was the Reserve Fund. The broker didn't fail, but Reserve did. It took months to get access to the money and I got something like 80 cents on the dollar with no interest.
Seconded. I got caught up in this debacle at Schwab in 2008. It was promoted as a safe, cash-like alternative. I even wrote checks off of it! Wow, did I feel brilliant. Until I got stabbed.
So you think that the risk of a broker failing is worth losing money on negative interest rates? M1 does not have a MM fund so I would have to use a treasury ETF. Right now I am using GBIL which is a cheaper version of SHV.
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technovelist
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Re: Negative 1 and 3 Month Treasury Rates

Post by technovelist » Thu Mar 26, 2020 8:50 am

jalanlong wrote:
Thu Mar 26, 2020 8:49 am
ochotona wrote:
Thu Mar 26, 2020 8:31 am
pugchief wrote:
Thu Mar 26, 2020 8:23 am
Do yourself a favor and buy a treasury only money fund with the idle cash. I had some cash at a broker in 2008 where the sweep fund was the Reserve Fund. The broker didn't fail, but Reserve did. It took months to get access to the money and I got something like 80 cents on the dollar with no interest.
Seconded. I got caught up in this debacle at Schwab in 2008. It was promoted as a safe, cash-like alternative. I even wrote checks off of it! Wow, did I feel brilliant. Until I got stabbed.
So you think that the risk of a broker failing is worth losing money on negative interest rates? M1 does not have a MM fund so I would have to use a treasury ETF. Right now I am using GBIL which is a cheaper version of SHV.
How much money are we talking about? Hundreds, thousands, tens of thousands?
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pugchief
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Re: Negative 1 and 3 Month Treasury Rates

Post by pugchief » Thu Mar 26, 2020 8:53 am

jalanlong wrote:
Thu Mar 26, 2020 8:49 am
ochotona wrote:
Thu Mar 26, 2020 8:31 am
pugchief wrote:
Thu Mar 26, 2020 8:23 am
Do yourself a favor and buy a treasury only money fund with the idle cash. I had some cash at a broker in 2008 where the sweep fund was the Reserve Fund. The broker didn't fail, but Reserve did. It took months to get access to the money and I got something like 80 cents on the dollar with no interest.
Seconded. I got caught up in this debacle at Schwab in 2008. It was promoted as a safe, cash-like alternative. I even wrote checks off of it! Wow, did I feel brilliant. Until I got stabbed.
So you think that the risk of a broker failing is worth losing money on negative interest rates? M1 does not have a MM fund so I would have to use a treasury ETF. Right now I am using GBIL which is a cheaper version of SHV.
Or withdraw the idle cash and park it in an FDIC insured account that you control at an A+ rated bank. It doesn't have to pay interest, a checking account is fine as long as the bank is healthy. YMMV
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ochotona
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Re: Negative 1 and 3 Month Treasury Rates

Post by ochotona » Thu Mar 26, 2020 8:59 am

Jalanlong have you bought I-Bonds this year yet?

https://www.treasurydirect.gov/indiv/re ... ibonds.htm
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jhogue
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Re: Negative 1 and 3 Month Treasury Rates

Post by jhogue » Thu Mar 26, 2020 10:51 am

Now would be a great time to start an I-bond ladder.

The yield on the I-bond will be 2.22% until 1 May 2020.

Get 'em while they are red-hot!
“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: Negative 1 and 3 Month Treasury Rates

Post by mathjak107 » Sat Apr 04, 2020 4:45 am

pugchief wrote:
Thu Mar 26, 2020 8:23 am
jalanlong wrote:
Thu Mar 26, 2020 8:00 am
ochotona wrote:
Thu Mar 26, 2020 7:27 am
jalanlong wrote:
Wed Mar 25, 2020 8:52 pm
Tortoise wrote:
Wed Mar 25, 2020 8:28 pm
jalanlong wrote:
Wed Mar 25, 2020 7:29 pm
If Tbill rates stay negative I could just keep that 25% in cash in the brokerage account uninvested.
By “uninvested,” you mean invested in your brokerage account’s settlement fund, which I believe is generally some kind of money market fund. Might want to look under that hood.
I don’t believe so. I use M1 Finance as my broker. Any uninvested cash just sits in the account. I looked and it offers no interest. I don’t believe they sweep cash to any fund.
Yes but they don't pile up paper currency on your behalf. It's going to be in Money Market assets not Treasuries, not FDIC bank deposits, and they keep the interest... Like Schwab.
What do I care what they are doing with my uninvested funds? Of course they could fail, that is a risk. My thoughts are that if I put $100 in an ETF like Bill or GBIL, I may very likely end up with $99 at the end of the month or year with negative short term rates. But my $100 uninvested is still $100 assuming the brokerage doesn't fail and SIPC insurance cannot cover it.
Do yourself a favor and buy a treasury only money fund with the idle cash. I had some cash at a broker in 2008 where the sweep fund was the Reserve Fund. The broker didn't fail, but Reserve did. It took months to get access to the money and I got something like 80 cents on the dollar with no interest.
i had reserve fund ..we lost 3% if i remember but it was locked for months. i luckily only had 35 bucks in it .
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