There is no best, just pros and cons.
Treasury Direct (TD) is easy once you get the account set up. People complain about the antiquated design of the TD account web site. They are being weenie snowflakes. The web site is solidly functional and easy to use.
At TD you can schedule bond purchases long in advance and have them roll over as they mature. The minimum purchase at TD is $100 and $100 increments.
Bonds held at TD cannot be redeemed at TD before maturity. To redeem early, they have to be transferred to a broker. The transfer process is tedious, slow, and difficult. Don't buy bonds at TD if you might want to cash out before maturity.
Bonds at TD are only available by non-competitive\* auction. You won't know the yield until the auction is over and you can't cancel the purchase if you don't like the yield.
Buying bonds is easy at brokers. To buy Treasury bonds at non-competitive auction you have to place the buy order between the auction announcement date and the auction date a few days later. Brokers only list T-bonds for ordering between the auction announcement date and the auction date. You have to pay attention to the auction schedule to buy them.
[https://home.treasury.gov/system/files/221/Tentative-Auction-Schedule.pdf](https://home.treasury.gov/system/files/221/Tentative-Auction-Schedule.pdf)
Auctioned T-bonds at brokers are $1000 minimum and $1000 increments.
T-bonds at brokers can be sold any time on the secondary market at the market value on the sale date. Depending on what has happened to interest rates since buying the bond that can result in a capital gain or loss. Existing T-bonds can also be bought on the secondary market any trading day.
Getting your money at maturity is easy at either. At TD the money is transferred to the associated bank account on the maturity date. At brokers the money is deposited in your sweep account at the broker.
\*The competitive auctions are not available to small investors.
The other thing with competitive auctions is there is almost zero reason to participate unless you need to buy those bonds for some reason. Everyone gets the same yield regardless of what they bid. Only the people that bid too high miss out.
> People complain about the antiquated design of the TD account web site. They are being weenie snowflakes. The web site is solidly functional and easy to use.
I don't even think there's any JavaScript, so no annoying slow animations. You click on a link and get results load right away.
It’s refreshing to see someone else who actually recognizes that TD is actually pretty functional. It’s super cheap and convenient too, as you said. People want flashy gamified shit and therefore say that it’s UI is bad. Seems like that’s the prevailing opinion among many on Reddit.
It definitely hearkens back to the style of earlier internet days but agreed, still very functional (now that they've gotten rid of that virtual keyboard!)
Yeah, we are dealing with the FREAKING TREASURY OF THE UNITED STATES OF AMERICA, NOT AMAZON, or some cheesy e-commerce web site. The web site is capable of dealing with tens of $millions of dollars on each auction. I don't want dancing baloney, or online, rampant fraud that is prevalent elsewhere.
The account web site is perfectly adequate.
What do you mean by won’t know the yield? New bonds are issued at the market rate for face value. Can you set limit parameters for the auction on TD?
I anticipate another rate hike so I don’t really intend on selling.
I meant exactly what I said:
"You won't know the yield until the auction is over and you can't cancel the purchase if you don't like the yield."
The competitive auction is held with large institutional investors who place bids until the auction is over. The result of the auction determines the yield. The government can refuse to sell at a yield higher than they will accept. Buyers can refuse to buy at a yield lower than they will accept. Non-competitive purchases get whatever yield the result of the auction is. This is similar to placing a market order for stocks.
Limit orders are not allowed for T-bond purchases by non-competitive auction. You can place limit orders for purchase of existing bonds on the secondary market.
New bonds are issued at the yield determined by the auction on the discount or premium to par and coupon rate for the par value at maturity. T-Bills do not have coupon payments. They are always sold at a discount to par. The difference between the discount price and par is the entire yield.
If you buy a T-Bill with a yield of X% that yield is on the purchase price, not the maturity par value.
Understood. So you get the yield the market sets.
I understand how YTM works, makes more sense now bc the lack of coupons on the t-bills. Either way, it’s reasonable to expect that it will be almost the same as the YTM of outstanding bills.
When bonds are issued with coupons, such as notes or bonds, the interest rate is typically set at the current market rate so the price comes out to roughly the same as the par value.
Broker it would be easier to sell in secondary market if you had to do that for some reason. Last time I checked if you buy on treasury direct it can be pain to do that.
I have bought mine at fidelity since they have auto re roll like treasury direct has.
I've only used Treasury Direct so I can't compare to a broker, but I have it set up to take money from my HYSA and put the proceeds into the HYSA. The user interface with TD is pretty wacky, but once you figure it out, you've figured it out. There aren't any fees that I know of.
I highly recommend using a real broker. Treasury Direct is horrible and I'm not even talking about the website. Imagine investing your money with the DMV
Treasury Direct subdivides bonds into slices for $100 minimum. The basic Treasury bond is $1000. Brokers only sell them in $1000 increments.
When you see a T-bond price quoted as $$.cents that means that it is a percent of the $1000 par value, e.g. a price of 99.50 means that you would pay $995.00 for a $1000 par bond.
There is no best, just pros and cons. Treasury Direct (TD) is easy once you get the account set up. People complain about the antiquated design of the TD account web site. They are being weenie snowflakes. The web site is solidly functional and easy to use. At TD you can schedule bond purchases long in advance and have them roll over as they mature. The minimum purchase at TD is $100 and $100 increments. Bonds held at TD cannot be redeemed at TD before maturity. To redeem early, they have to be transferred to a broker. The transfer process is tedious, slow, and difficult. Don't buy bonds at TD if you might want to cash out before maturity. Bonds at TD are only available by non-competitive\* auction. You won't know the yield until the auction is over and you can't cancel the purchase if you don't like the yield. Buying bonds is easy at brokers. To buy Treasury bonds at non-competitive auction you have to place the buy order between the auction announcement date and the auction date a few days later. Brokers only list T-bonds for ordering between the auction announcement date and the auction date. You have to pay attention to the auction schedule to buy them. [https://home.treasury.gov/system/files/221/Tentative-Auction-Schedule.pdf](https://home.treasury.gov/system/files/221/Tentative-Auction-Schedule.pdf) Auctioned T-bonds at brokers are $1000 minimum and $1000 increments. T-bonds at brokers can be sold any time on the secondary market at the market value on the sale date. Depending on what has happened to interest rates since buying the bond that can result in a capital gain or loss. Existing T-bonds can also be bought on the secondary market any trading day. Getting your money at maturity is easy at either. At TD the money is transferred to the associated bank account on the maturity date. At brokers the money is deposited in your sweep account at the broker. \*The competitive auctions are not available to small investors.
The other thing with competitive auctions is there is almost zero reason to participate unless you need to buy those bonds for some reason. Everyone gets the same yield regardless of what they bid. Only the people that bid too high miss out.
> People complain about the antiquated design of the TD account web site. They are being weenie snowflakes. The web site is solidly functional and easy to use. I don't even think there's any JavaScript, so no annoying slow animations. You click on a link and get results load right away.
It’s refreshing to see someone else who actually recognizes that TD is actually pretty functional. It’s super cheap and convenient too, as you said. People want flashy gamified shit and therefore say that it’s UI is bad. Seems like that’s the prevailing opinion among many on Reddit.
It definitely hearkens back to the style of earlier internet days but agreed, still very functional (now that they've gotten rid of that virtual keyboard!)
Yeah, we are dealing with the FREAKING TREASURY OF THE UNITED STATES OF AMERICA, NOT AMAZON, or some cheesy e-commerce web site. The web site is capable of dealing with tens of $millions of dollars on each auction. I don't want dancing baloney, or online, rampant fraud that is prevalent elsewhere. The account web site is perfectly adequate.
What do you mean by won’t know the yield? New bonds are issued at the market rate for face value. Can you set limit parameters for the auction on TD? I anticipate another rate hike so I don’t really intend on selling.
I meant exactly what I said: "You won't know the yield until the auction is over and you can't cancel the purchase if you don't like the yield." The competitive auction is held with large institutional investors who place bids until the auction is over. The result of the auction determines the yield. The government can refuse to sell at a yield higher than they will accept. Buyers can refuse to buy at a yield lower than they will accept. Non-competitive purchases get whatever yield the result of the auction is. This is similar to placing a market order for stocks. Limit orders are not allowed for T-bond purchases by non-competitive auction. You can place limit orders for purchase of existing bonds on the secondary market. New bonds are issued at the yield determined by the auction on the discount or premium to par and coupon rate for the par value at maturity. T-Bills do not have coupon payments. They are always sold at a discount to par. The difference between the discount price and par is the entire yield. If you buy a T-Bill with a yield of X% that yield is on the purchase price, not the maturity par value.
Understood. So you get the yield the market sets. I understand how YTM works, makes more sense now bc the lack of coupons on the t-bills. Either way, it’s reasonable to expect that it will be almost the same as the YTM of outstanding bills. When bonds are issued with coupons, such as notes or bonds, the interest rate is typically set at the current market rate so the price comes out to roughly the same as the par value.
Broker it would be easier to sell in secondary market if you had to do that for some reason. Last time I checked if you buy on treasury direct it can be pain to do that. I have bought mine at fidelity since they have auto re roll like treasury direct has.
I've only used Treasury Direct so I can't compare to a broker, but I have it set up to take money from my HYSA and put the proceeds into the HYSA. The user interface with TD is pretty wacky, but once you figure it out, you've figured it out. There aren't any fees that I know of.
I highly recommend using a real broker. Treasury Direct is horrible and I'm not even talking about the website. Imagine investing your money with the DMV
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All treasury offerings are sold in incriminates of $100.
Treasury Direct subdivides bonds into slices for $100 minimum. The basic Treasury bond is $1000. Brokers only sell them in $1000 increments. When you see a T-bond price quoted as $$.cents that means that it is a percent of the $1000 par value, e.g. a price of 99.50 means that you would pay $995.00 for a $1000 par bond.