Like many others, I'm thinking about buying 4/8wk t-bills via the auction process. I'm curious if anyone else is taking into the account a "discount" in regards to the actual rate to account for settlement periods where your money is essentially un-invested. A 3-4 period before your money is re-invested when you buy longer bonds isn't a big deal- but 3 - 4 days before you are back into a 4/8wk t-bill adds up to be quite a lot of interest lost over the course of time. (I'm referring to the 3-4 day, non-interest accruing period between a 4wk bond maturity and the next time that money can be invested back into the same t-bill.)
In short, I'm trying to compare the current rates between a HYSA (3.4% at Ally) and today's rates for a 4wk t-bill (4.77%). After factoring in my state income tax (~5%) if I do a HYSA, versus accounting for the un-invested time when doing short t-bills, the difference becomes much less.
Around 3.2% actual post-tax gain in my pocket compared to around 3.7% (if my maths are correct, which they very well could be off) for 4 wk t-bills.
Hope my thought process is correct but definitely pointing this out to see other's perspectives. Thanks.
Submitted March 09, 2023 at 01:49AM by telekaster57 https://ift.tt/KMqphxs
