20% T-Bill Strategy that Beats Stocks

T-Bill investing is the big investment this year with Treasury Rates above 5% for safety and cash yield. In fact, millennials reported in a Schwab survey they have nearly half of their portfolio in T-Bills and other Treasury Bonds. The Treasury ETFs like the TLT, IEF and BIL have seen record inflows this year as investors rush in.

I'll cover T-Bill basics and how these investments work then walk you through step-by-step two ways to buy T-Bills. I'll explain your T-Bill returns and show you how to buy T-Bills on TreasuryDirect or a broker like ETrade, Fidelity or Vanguard.

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Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through dividend stocks, investing and ways to make more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps.

0:00 Treasury Bills for Beginners
1:32 What are T-Bills?
1:38 T-Bill Investing Periods
1:58 T-Bills vs Treasury Notes vs Treasury Bonds
3:00 Treasury Bill Interest Rates
3:10 Are T-Bills Safe?
3:31 T-Bill Pros and Cons
5:54 How to Buy T-Bills on TreasuryDirect
7:26 How to Buy T-Bills on ETrade, Fidelity or Vanguard
8:34 Should You Buy T-Bills on TreasuryDirect?
9:41 Treasury Bills vs IBonds
10:37 Treasury Bill Exchange Traded Funds
10:46 iShares 20-Year Treasury Bond ETF TLT
11:12 iShares 7-10 Year Treasury Bond ETF IEF
11:33 SPDR 1-3 Month T-Bill ETF BIL
12:09 T-Bill ETF vs T-Bills
13:12 Special T-Bill Investing Strategy

[georgestone]

I often wonder how successfuI investors are able to make millions of $$ from trading stocks. Im completely new on this area of investing. Long story short I have $300K saved up which i want to invest for long term and I know this sounds a bit dull but, I would like to know what advice you could give to start my investing journey.

[jameswood]

I am at the beginning of my "investment journey", planning to put 85K into dividend stocks so that I will be making up to 30% per year in dividend returns. Any advice?

[havarez]

To be kinda blunt, I am giving up on investing in the market... I put
between 2000 to 3000 every month and it's doing nothing but going down down....
frustrating and I only invest in boring big companies.
What can I realy do?.

[Emily-leop]

I feel investors should be focusing on under-the-radar stocks, and considering the current rollercoaster nature of the stock market, Because 35% of my $270k portfolio comprises of plummeting stocks which were once revered and i don't know where to go here out of devastation

[chrishamlin]

I bought SGOV this year through Fidelity. With the .07% expense ratio and a yield of 4.61% I'm comfortable with that. I know it's not as great as buying it directly, but the money is more liquid this way.
Awesome tip for the covered calls. Maybe I need to move out of SGOV now. :D

[clays]

The way you get in trouble is... You buy TLT at $90 and make $2 from selling the January Call and then TLT drops to $85 in January. What do you do? Sell the February $85 call trying to break even or get out with a little loss? Sell a longer dated $90 call hoping for a rally? What you eventually find out is, any stock or ETF that has any premium worth selling is on its way down.

[Mariagreta-gvle]

)My spouse and I are adding a variety of stocks/ETF to my present holdings for the long term, We've set aside $250k to start following inflation-indexed bonds and stocks of companies with solid cash flows, I believe it is a good time to capitalize on the market for long-term gains, but it wouldn't hurt to know means of actualizing short term profit.

[Frank]

Hi that's a lot of info. I think all sound good, i would rather have the t-bills completely separate from stocks. that way the stock account is hands off during melt downs. The bonds can be used for emergency money.

[larrypaul-cwnk]

Success depends on the actions or steps you take to achieve it. Building wealth involves developing good habits like regularly putting money away in intervals for solid investments. Financial management is a crucial topic that most tend to shy away from, and ends up haunting them in the near future.., I pray that anyone who reads this will be successful in life!!

[davidofglenbrook]

Hey! I say go 100% T Bills! Then you can REALLY crush stocks!! You are so smart, Joe!

[jonathanlangford]

You're not earning an extra 1% on the T-Bill as opposed to the short term ETF. One is interest payment/capital return, the other is dividend payment. There's a difference. The ETF targets a range of maturity so it will use a combination of capital return and interest to meet that target. The excess is paid out as dividends and expenses.

[RobC]

This year I’ve parked my cash in BIL, getting the monthly payout and us the BIL shares as collateral for selling cash secured puts - double income for the same money

[pauljoseph]

I've been buying longer notes and bonds outright directly from Treasury Direct rather than investing in ETFs. With direct ownership, you know what the return will be. When interest rates drop so will the returns and the share prices of ETFs. I keep about 15K of cash rolling in T bills to goose the returns some more. I remember when my online savings account was returning 5% in 2007, then the crash came and interest rates dropped for a long time. I'm locking in this time.

[RetireandGo]

This is appreciated!
I need to look into these more
I have bond funds but no t bill funds

[santiagonegroni]

I Started buying TMF a month ago.
Added twice already.

[robbytodd]

For the last year + I have been rolling over 4 and 8 week T-bills. Now looking to buy into the TLT or BLV to hopefully capture price appreciation with the monthly dividend yield. I really love how Joseph adds in the idea of monthly covered calls. Hopefully the fed will start the interest rate cuts and let the TLT or BLV price appreciation begin.

[dassa]

Treasury Direct one month Tbills 5.50% compounded monthly no state or local.

[Vacationtime]

Going to roll over our I-bonds we bought on 4/22 and lock in the new 1.3% fixed rate at the beginning of February. Likely the fixed rate on the I-bonds will be adjusted down in May with the yield on the 10 year TIPS falling.
VT247

[ronniebohl]

TMF will be fantastic for the next year or so. Because of lower interest rates. I feel strongly about this move!

[davidwall]

Any chance you have a video explaining the TLT/options strategy in more detail? Not really sure how to execute this strategy. No experience with options.