Investing in US Treasuries

[Caractacus Potts]

I probably should have titled this "Has anyone invested in US Treasuries (directly)." I am closing on the sale of my condo in a blue city next week. I have held the property for over four years and have done extensive renovations. I will net a little over $100,000 USD. Considering interest rates are so high I checked online to see what I can get by buying treasuries.

I looked online at US Treasury Direct but I have a bit of a cold and am sleep deprived. What I want to know is if you look at the results of the most recent T Bill auction, how much interest are you actually earning? See attached.

The auction results show a high rate of 5.30% and a low of 5.20%. Is that the discounted amount for that time period (in this case 28) days or is it annualized? In other words if I buy $100,000 worth of TBills will I receive $105, 0200 return in 28 days? If I can earn over 5% for holding for a month why would I lock up my money for 6 months to a year for only a slightly higher amount?

Am I missing something or am I overthinking this? Thanks.

 

[HoaxWhisperer]

I've never bought t bills but I'm under the impression that the figures are an annualized yield. I don't think they're giving 5% returns per month.

I also think its typically represented in the purchase price. So a $100 t bill will be sold to you for $99.75834 or whatever the math is, and redeemed for $100 when the term is up.

If anyone has experience please chime in.

 

[cosine]

That is 5.2% return annually.
If you hold for one month, your $100,000 will become about $100,433.

They are bonds. If interest rates drop, your bond will be worth dramatically more on the market. If interest rates rise, the value of your bond will plummet.

So, with bonds you are taking on interest rate risk.

In summary:
1. Your gain is 5.2% annually
2. The fact that you don’t understand this is frankly worrying and suggests to me you should speak with a financial advisor. I highly advise against putting it all into that treasury.
3. You can use Apple Savings and get 4.15% without the interest rate risk, or get 5% ish with major banks like Citi. That’s my short term recommendation for you.