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Buying secondary issues thru Fidelity
Old 09-24-2006, 04:04 PM   #1
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Buying secondary issues thru Fidelity

I found a really short Treasury online that appeared to have an attractive yield so considered buying 40 for Mom. When I plugged in the $$ (including transaction cost of $0.50/each) the actual yield was half that rate, significantly less than mm (you "buy" the accrued interest). Because Mom doesn’t need the state tax preference I passed. Anyone else have this experience??

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Re: Buying secondary issues thru Fidelity
Old 09-24-2006, 04:10 PM   #2
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Re: Buying secondary issues thru Fidelity

I don't deal with Fido, but you might consider just buying some 3 or 6 month treasuries at auction. Like Schwab, I think Fido lets you buy treasuries as auction for nothing.

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Re: Buying secondary issues thru Fidelity
Old 09-24-2006, 04:42 PM   #3
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Re: Buying secondary issues thru Fidelity

When you buy a bond on the secondary market you have to pay all accumulated interest to the owner* up to that point so it seems like you are paying alot more than you are. Dont forget the treasuries pay interest every 6 months so lets say you buy a month before the interest is paid out.. You would pay the old owner 5 months interest when you buy as well as the price of the bond. You then keep the 6 months interest thats paid the following month and your reimbursed and clear 1 months interest for the exact amount of time you owned it..
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