Holding Individual T-Bills for Cash?
Posted: Tue Sep 28, 2010 2:13 pm
Harry likes holding individual LT Bonds himself as it reduces counterparty risk by removing a layer between you and your assets.
Did he ever suggest holding individual TBills?
I ask because VG's Treasury MMF is closed, pending a substantial rise in interest rates that would allow it to reopen. I understand there is an ETF (SHV I think) that holds TBills but it's not something you can easily and cheaply add new money into weekly like a MMF. Even if you had free trades of SHV, there's still some fluctuations in share value I think, unlike a fixed $1 MMF.
Even after VG's T-MMF reopens, would it make sense to hold TBills? It seems like a pain in the ass to keep buying new ones at auction every 30 days. Do any brokerages do it automatically for free?
Do TBill auctions ALWAYS occur 30 days apart at least, so that this is even possible? Or would you have to take possession of the money for a few days until the next auction? If so, then your brokerage would have to hold your cash in their cash sweep account for a few days, and now you added a new layer of risk at least for a few days each month.
The answer is probably no to this question, unless you have huge assets and spend your life managing your money because you have $10M and are retired, then it might work
Did he ever suggest holding individual TBills?
I ask because VG's Treasury MMF is closed, pending a substantial rise in interest rates that would allow it to reopen. I understand there is an ETF (SHV I think) that holds TBills but it's not something you can easily and cheaply add new money into weekly like a MMF. Even if you had free trades of SHV, there's still some fluctuations in share value I think, unlike a fixed $1 MMF.
Even after VG's T-MMF reopens, would it make sense to hold TBills? It seems like a pain in the ass to keep buying new ones at auction every 30 days. Do any brokerages do it automatically for free?
Do TBill auctions ALWAYS occur 30 days apart at least, so that this is even possible? Or would you have to take possession of the money for a few days until the next auction? If so, then your brokerage would have to hold your cash in their cash sweep account for a few days, and now you added a new layer of risk at least for a few days each month.
The answer is probably no to this question, unless you have huge assets and spend your life managing your money because you have $10M and are retired, then it might work