Treasury Bills, Notes, and Bonds Discussion 2024+

[xlf11]

Now you can cancel auto-roll on the website, so it does not hurt to set it on when buying.

 

[audreyh1]

I am a new Fidelity account holder and fixed income investor. I purchased my first large 8 week Treasury bill today. I had the option to select Auto Roll but held off for now as it is a new option for me.
Are most fixed income investors selecting Fidelity's Auto Roll option for now?
Does Auto Roll only work for the Treasury bill purchase or also the CD's that I hold in the account?
How large of purchase would you make in these Treasuries at one time?

It’s easy to turn off autoroll online for a specific treasury anytime now. And you usually also have an opportunity to cancel the autoroll buy order once it’s placed. It’s usually placed late afternoon of the auction announcement or the next day. I once had it place late early morning of the auction. You can also call in for help if needed.

I’ve been letting most of my T-bills roll over via autoroll.

 

[Chuckanut]

Auto roll on short term treasuries,about six months or less, might make sense for some people. I would not use auto roll at a year or more. Too long to wait to correct a mistake.

 

[Healthy Lifestyle]

Thanks to all and appreciate the very helpful comments.

 

[Milkman]

One reason I use auto roll is that when you regularly reinvest the maturing T-Bill manually, you lose out on a week's worth of interest. Auto roll reinvests the money immediately or even shortly before. I have 3 month T-bills maturing on a monthly basis so that this is convenient and over the long term earn more interest.

 

[Chuckanut]

I have 3 month T-bills maturing on a monthly basis so that this is convenient and over the long term earn more interest.

I am not sure about that. Right now we have an inverted yield curve where short term rates are higher than long term rates. That’s not the historical norm. I still like a Ladder from about one to 5 years. But, to each his own. Good luck.

 

[Healthy Lifestyle]

Interesting food for thought and can go either way.
Would be better off, if I knew for certain.

 

[Milkman]

This is not necessarily part of a ladder. I like having a T-bill mature monthly if I should need the money. For that purpose I have purchased 3 separate 3 month T-bills; one in each consecutive month, and I have a T-bill maturing every month. On the other hand, I do have bills and notes laddered further out. My point is if I renew that bill, I receive the money on the day it matures, go to the next auction, and the bill is repurchased a week after the previous one has matured. That time represents lost interest earned. This problem is alleviated by auto roll, which renews the matured bill on the same day or slightly earlier.

For example: If I have a $10,000 - 13 week T-bill that matures earning me $132.50 in interest, and it takes me a week to renew the bill, I have lost roughly $10.19 in interest.

Either that or my logic is wrong. (which wouldn't be the first time )

 

[Healthy Lifestyle]

I follow your thinking and managing fixed income duration minimizes your interest rate risk especially if you have won the game.

 

[jldavid47]

One reason I use auto roll is that when you regularly reinvest the maturing T-Bill manually, you lose out on a week's worth of interest.

This is not true. At least at Schwab. I can put in an order for the auction to replace the maturing T-bill and while my account shows a negative balance for a few days, the money is there on the settlement date due to the maturing bill. I do this all the time.

 

[Milkman]

You may be correct. I just came over to Schwab from TD Ameritrade in the last group to transfer over in May. I just started to utilized Schwab's auto roll and have not had any of these mature at this time. I also have accounts at Fidelity that have been using auto roll for some time. I did neglect to mention that Fidelity's sweep account is a money market account that mitigates the problem somewhat. But Schwab's sweep account only pays 0.0045% (I believe) and the week's layover to renew the bill is too short to temporarily put the funds into SWVXX. Fidelity does the roll over the day the old bill matures or shortly before. I have yet to experience a completed auto roll on Schwab.

 

[Dash man]

You may be correct. I just came over to Schwab from TD Ameritrade in the last group to transfer over in May. I just started to utilized Schwab's auto roll and have not had any of these mature at this time. I also have accounts at Fidelity that have been using auto roll for some time. I did neglect to mention that Fidelity's sweep account is a money market account that mitigates the problem somewhat. But Schwab's sweep account only pays 0.0045% (I believe) and the week's layover to renew the bill is too short to temporarily put the funds into SWVXX.

In my last discussion with my Schwab advisor, he told me he changed my sweep account to a higher interest rate. The symbol that shows up with interest payments is SWGXX at 4.92%. The rate is slightly below SWVXX.
I had been discussing previously over the past few months some issues I’ve had with Schwab and compared some to Fidelity. I think they were concerned about losing me.

 

[Exit 2024]

This is not true. At least at Schwab. I can put in an order for the auction to replace the maturing T-bill and while my account shows a negative balance for a few days, the money is there on the settlement date due to the maturing bill. I do this all the time.

I do the same but it is manual process, I do not think auto-roll works that way at Schwab.