Question re: buying treasury bills thru Treasury Direct

[lucky penny]

I see that when you buy a T bill on TreasuryDirect's website, which I'm about to do, they ask whether you want the proceeds reinvested. I assume your choice can be changed prior to maturity -- is that right? If so, how?

Thanks much -- it's been a while since I've done this.

 

[plsprius]

I far prefer to buy treasuries through Schwab/Fidelity/Vanguard. When you buy them online at the frequent treasury auctions (daily/weekly/monthly depending on the maturity) there is NO commission, at least at these brokerages. You can also buy and sell at market, of course, but you lose a bit to the spread between bid/ask prices.

Here's the schedule of upcoming treasury auctions:
https://home.treasury.gov/system/files/221/Tentative-Auction-Schedule.pdf

When the treasuries mature the funds are then deposited back into my brokerage account.

I only use Treasury Direct for holding I-bonds.

 

[JoeWras]

OP: I'll actually try to answer your question instead of encouraging you to do something completely different which seems to be the common answer when people mention Treasury Direct. (Can't completely blame them because TD is a hot mess of an old system.)

The answer is, yes, you can change the "Payment Destination" or "Schedule Reinvestments" while the Bill or Bond is running its course. I have no idea what the window is for this. I have actually never done it. But I do have a Bill, and I just pulled it up and there are options to change things (see below). I clicked on it and it allows me go up to 3 reinvestments. Mine is currently at 0.

Actually, thank you for mentioning this. I may use this instead of letting it roll to my C&I and then reassessing later. That's wasteful since C&I is 0% and the cash ends up in limbo for a while.

 

[Dash man]

I just have it deposited into a savings account. From there I can move it into my Schwab account to invest.

 

[jazz4cash]

I have a related question. Does the interest compound? I know i should research this myself or i could try to calculate over a few months I guess but the website is confusing.

 

[jazz4cash]

I have a related question. Does the interest compound? I know i should research this myself or i could try to calculate over a few months I guess but the website is confusing.

NM. Found the answer on TD website.


“The interest is compounded semiannually. Every six months from the bond's issue date, interest the bond earned in the six previous months is added to the bond's principal value, creating a new principal value. Interest is then earned on the new principal.”

 

[JoeWras]

More info:
Latest auction results: https://www.treasurydirect.gov/instit/annceresult/annceresult.htm

An article about the math of calculating rates: https://www.mymoneyblog.com/how-to-...eturns-directly-to-savings-account-rates.html

Also note that T-Bills, T-Notes and T-Bonds have differences. T-Bills "pay" the entire interest up front. Well, not really. What happens is you buy the bill at a discount. So, this frees up that money (the discount element) to be used elsewhere. At the end of the term, you get paid face value, so that's when you really get the interest and it becomes a reportable tax event.

T-Notes and T-Bonds are hybrid. They have a discount value AND you get paid every 6 months. At least for individual investors this interest cannot get rolled into the note or bond. It gets paid out. Those payouts are reported as taxable events.

jazz4cash: the thing you quoted about interest being added to principal is for savings bonds.

 

[big-papa]

The answer to your question is on this page:
https://www.treasurydirect.gov/indiv/research/indepth/tbills/res_tbill_reinvestredeem.htm

Specifically:
"You can schedule a reinvestment either when you buy your original security or up to four business days before the original security matures. Once you schedule a reinvestment, you can edit or cancel it within the same time frame."

Cheers,
Big-Papa