I've been trying to figure out why anyone just trying to get the best short term safe interest rate on otherwise idle money would invest in T-Bills rather than a money market, today in late 2023.
I have some ideas why but am I missing anything?
- T-bills at present offer a slightly higher interest rate.
- T-bills have no expense ratio. My guess is that is the reason for number 1 above.
- T-bills rate won't change during the holding period. It's set until maturity. MM fund yields fluctuate.
- T-bills can be traded. For a profit sometimes. Or you can hold until maturity.
While Money Market funds have these advantages:
- MM funds are more liquid. You can cash out any time instantly. You can even write checks on a Money Market fund.
- MM Funds could maybe be taxed at a lower rate if held long enouht to be considered long term capital gains.
- MM Funds don't come with commissions in your brokage account by T-bills might. I use Fidelity.
Did I miss anything?
My goal is to just make the most interest on money I don't intend to invest in the stock market for 6 months to a year. So I've been considering T-bills for 6m or maybe 1 year maturity. But then I look and the MM funds in my sweep or "core" accounts and they yield only a little lower.
With T-bills I GUESS it's about locking in a hopefully high rate if you expect interest rates to go down soon. But right or wrong I don't. Not in the near future anyways. T-notes or T-Bonds for longer terms I would think would be better for locking in what you THINK are going to be higher rates than possible lower rates a few years out. But I don't even have a hunch on that. I just want to get the best interest on money that I have sitting and waiting for better stock opportunities.
Submitted September 10, 2023 at 01:57AM by MCDiver711 https://ift.tt/YgOpCS1
