Buying Bonds

J

jmp470

Recycles dryer sheets
Joined
Mar 4, 2016
Messages
85
Does anyone utilize TreasuryDirect for their bond purchases and active management of their bonds?

I’m tempted to move a bulk of money out of my other accounts and go directly to TreasuryDirect.

I know one of the differences is Competitive vs. non Competitive bidding. Has this been rewarding for those that go with a big bank?

I know that going with Fidelity or TDAmeritrade they can bundle customer purchases and potentially get a better rate, but, they have fees associated with their accounts.

I would like to see some active debates here, as I’m not sure which way I want to go...

P.S... I’m preparing for when I win the lottery and buy Millions of dollars worth of bonds.. :D

P.S.S... Just kidding... I’m just wanting to control more of my bond purchases and cycles
 
jmp470 said:
I know that going with Fidelity or TDAmeritrade they can bundle customer purchases and potentially get a better rate, but, they have fees associated with their accounts.
Click to expand...

What fees does Fidelity have associated with their accounts as it pertains to treasuries?
 
For online orders of treasuries there are none.
 
I have a small amount of I Bonds that I use treasury direct for. I have found the treasury direct interface to be easy to use.
 
NJhowie: I have not opened the TreasuryDirect account, yet. So I don’t know how the process works there. If you do have access to it, can you please elaborate on your comment?
 
I used Treasury Direct for years. I had it linked to Fidelity and was very straight forward to get bonds of various types. The interface is a bit clunky, but effective. I don't think there are separate fees. Of course the only holdings in TD are going to be the bonds you buy inside that portal.
 
I have used and continue to use both Treasury Direct and Fidelity for Bond Purchases. Fidelity has the advantage of getting an immediate bond and very low fees, if you are holding bonds for any length of time, fees get pretty close to effective rate of zero and if a blip happens in the market with a major move in bond yields you can sell quickly as well. I know they claim no fees but order executions are almost always a few dollars higher than the original estimate for me, in general I don't worry about a couple of bucks of slippage.

Treasury Direct has absolutely no fees, if you are just looking to invest and get the market rate on the day of issuance, and hold to maturity there is nothing wrong, works like a charm, you can purchase and there are no daily quotes to tempt you into selling.
 
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Let me expand my thoughts, now that I got some feedback, as I don’t see a clear cut answer, which there might not be. Also, it gives y’all context to potentially help me better.

My outlook on accounts and how I utilize them (always up for debates here)

1. Active Work Income goes into my checking account, and I keep it at or near zero as possible. I currently keep my emergency fund in USAA Treasury fund (It has management fees... this is what got me thinking...)

2. I’m aggressively paying off my pool, as per my post on should I utilize 0% CCs to pay it down faster and avoid interest. (We decided it wasn’t worth it, but, it was a good mental exercise).

3. I’m actively trading stocks and we decided that we don’t need the money considered as Active Work Income. So I want to put 50% of my profits into Treasuries. I’m trying to decide what’s the best place to do this at.

My trading account is with Trade Station: As they have near zero fees for Military / First Responders. And there futures rates are very low too.

I have a TDAmeritrade account, but, I don’t really utilize them anymore, as there fees are 6.95 per trade. (When I scale into a stock, say I want 10,000 - 30,000 in a stock, I do this over 5 - 10 buys... With TS, I only pay the mandatory fees when I sell, whereas with TD I could end up paying $100’s in fees)

Now onto treasuries. I know it will not generate a ton of money, but, ever little bit helps.

Any advice would be great, thanks.

I hope this helps with what I’m trying to do.
 
jmp470 said:
Let me expand my thoughts, now that I got some feedback, as I don’t see a clear cut answer, which there might not be. Also, it gives y’all context to potentially help me better.

My outlook on accounts and how I utilize them (always up for debates here)

1. Active Work Income goes into my checking account, and I keep it at or near zero as possible. I currently keep my emergency fund in USAA Treasury fund (It has management fees... this is what got me thinking...)

2. I’m aggressively paying off my pool, as per my post on should I utilize 0% CCs to pay it down faster and avoid interest. (We decided it wasn’t worth it, but, it was a good mental exercise).

3. I’m actively trading stocks and we decided that we don’t need the money considered as Active Work Income. So I want to put 50% of my profits into Treasuries. I’m trying to decide what’s the best place to do this at.

My trading account is with Trade Station: As they have near zero fees for Military / First Responders. And there futures rates are very low too.

I have a TDAmeritrade account, but, I don’t really utilize them anymore, as there fees are 6.95 per trade. (When I scale into a stock, say I want 10,000 - 30,000 in a stock, I do this over 5 - 10 buys... With TS, I only pay the mandatory fees when I sell, whereas with TD I could end up paying $100’s in fees)

Now onto treasuries. I know it will not generate a ton of money, but, ever little bit helps.

Any advice would be great, thanks.

I hope this helps with what I’m trying to do.
Click to expand...

Thanks for the elaboration - it clears things up.

If you already have the account at TD, then you could simply utilize it for treasuries as someone has indicated they do not charge any fees for them. The benefit of purchasing the treasuries through one of the brokerages is that you will have a much wider selection of treasury issues available to you. On treasury direct, you will only be able to purchase what they are offering at that time. The brokerage will give you a view of the entire treasury market.

Additionally, if you want/need to sell - can you do that on treasury direct or do you have to hold until maturity? With the brokerages, since you are dealing with the market, it is liquid and it is easy to sell immediately if you want/need to.

As far as being an active trader - you should consider Robinhood. I've been on it for 8 months now and it is excellent. There are no commissions whatsoever and the executions are exactly what you'd expect. When there are no commissions, scaling in to a position and out of one is a pleasant experience. When you are paying commissions you're always thinking about how big to size your trades to not be paying lots of commissions. With Robinhood you do not have that mindset - it changes ... you can buy 5 shares or even one share, there's no commission no matter how small the trade. I find you get the best experience using it in conjunction with another platform where you have better information and real-time tools available. I use it alongside my Fidelity active trader and it works well.
 
Considering your extra info, think about the level of simplicity you want. It sounds like you're an active trader, but also want an easy and simple place to put your profits. I second njhowie's suggestion of using your existing TDA account for Treasuries. You might also take a look at their selection of NTF ETFs and mutual funds. They should have some Treasury options in those, as well as money market funds, or ultra short bond funds. How about brokered CDs?
 
Gwraigty, I have to learn more about the Brokered CD’s. I was thinking keep my expirations short term, no more than 52 weeks, as per the liquidity comments above, but, I will also look at TD, and do some online classes with them.

TS is the same as robinhood, it seems. But, I’m really liking TS and I don’t want to change again.
 
I almost went with Ninja Trader (by far the cleanest interface I have used to date as it comes to viewing charts and the TA indicator I use). But, its limited on who I can interface it with, so I didn’t buy it.
 
jmp470 said:
Gwraigty, I have to learn more about the Brokered CD’s. I was thinking keep my expirations short term, no more than 52 weeks, as per the liquidity comments above, but, I will also look at TD, and do some online classes with them.
Click to expand...

If you're looking for 1 year or less, I probably wouldn't bother with CDs then. A money market mutual fund of some sort would have full liquidity and suit your needs.
 
I don't know why, given the zero or near-zero cost of buying bonds at Schwab, Fido, et al, why anyone would screw around with TreasuryDirect. I don't think there is anything that one can do with TreasuryDirect that you can't do with a brokerage account, including noncompetitive purchases at auctions.
 
@oldshooter For someone like me its about the lack of knowledge (for now) and trying to figure out ease of use and minimal costs.

This will be my first go at treasuries. But, I could doing more and more of it, as I get older and I’m putting more and more money into it.
 
jmp470 said:
@oldshooter For someone like me its about the lack of knowledge (for now) and trying to figure out ease of use and minimal costs. ... .
Click to expand...
I apologize if I came across as critical; that was not my intention.

Everybody needs education & on a continuing basis. I suggest that you call Schwab and Fido even if you don't have an account with them. Tell them you are a prospective customer and would like to talk to their bond guys to understand options and costs. Then call and ask your questions including about TreasuryDirect. I have found the Schwab guys to be very patient and helpful. Fido is, I expect, going to be the same.

You can also PM me if you want the name and phone of the Schwab bond guy I usually talk to. IIRC he has 14 years in the business and he is not paid on commission. I'm sure he would be happy to contribute to your education as he has mine.
 
I didn’t take it as critical. I was just acknowledging a knowledge gap that I have, that I now want to close. I will work it with TD for now. If I run into road blocks, I will definitely reach out to you.
 
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jmp470 said:
Gwraigty, I have to learn more about the Brokered CD’s. I was thinking keep my expirations short term, no more than 52 weeks, as per the liquidity comments above, but, I will also look at TD, and do some online classes with them.

TS is the same as robinhood, it seems. But, I’m really liking TS and I don’t want to change again.
Click to expand...

gwraigty said:
If you're looking for 1 year or less, I probably wouldn't bother with CDs then. A money market mutual fund of some sort would have full liquidity and suit your needs.
Click to expand...

+1 One-year brokered CDs are yielding 1.95%.... VMMXX is yielding 2.29% APR and there are loads of online savings accounts out there at 2% or more.
 
pb4uski said:
+1 One-year brokered CDs are yielding 1.95%.... VMMXX is yielding 2.29% APR and there are loads of online savings accounts out there at 2% or more.
Click to expand...

VMMXX and all the online savings accounts yields are likely going to fall (further) very soon.
 
Did the fed reduce the interest rate? If so, gold should fly... it has one heck of base setting too.

I see we they are meeting now. Time will tell....
 
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jmp470 said:
Did the fed reduce the interest rate? If so, gold should fly... it has one heck of base setting too.

I see we they are meeting now. Time will tell....
Click to expand...

Wednesday afternoon.
 
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