Thursday, July 17, 2008

Out of T-bills, for now

Just over two years ago I started an experiment to buy 1-month (4-week) T-bills directly from the U.S. Treasury via TreasuryDirect and automatically roll them over as they matured every four weeks. Sometimes the yield was really good and sometimes it was really lame. TreasuryDirect does not allow you to place a standing order to roll T-bills, but you can place a repeated order that repeats for some period of time. In my case I chose two years. Well, the two years ended in the first week of June and I neglected to renew the orders, so TreasuryDirect transferred the cash to my bank account and that was that. The yield has been quite lame lately (1.52% this week), so I was happy to shift the money to my Fidelity money market fund that is currently yielding 2.49%.

My financial situation is semi-stable, so I could consider placing a small portion of my cash into a longer-term asset, but it would be too small an amount to be worth my trouble.

I am only working part-time right now, so my net savings rate is rather small and is not strengthening my financial situation at a fast enough pace to consider additional investment options at this time. I still have a very modest dollar-cost averaging investment plan with ShareBuilder, and my cash is compounding, and I do save a tiny bit from each paycheck, but that is about it for me at this time. Of course, even that meager savings rate may put me in the top 30% of Americans, if not higher.

I may (and probably will) consider T-bills or a ladder of T-bills and T-notes in the future, but for now I am out of T-bills.

In truth, T-bills are a bit of a hassle compared to money market funds. Sure, they do have incredible safety, but I am personally not one of those people who spends his days wringing my hands about the coming collapse of the banking system (caused by that evil conspiracy called the Federal Reserve!), so the lame yield of T-bills is a deal-killer for me.

Since my financial situation is only semi-stable, having cash "just a click away" has high "value" to me.

-- Jack Krupansky


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