Going To Try US-T Bills

[revhappy]

I found this gem of an ETF, which is UCITS, so no worries about witholding tax etc. This is a good alternative to the 6 month TBill? Any pitfalls. okay I understand bond and a fund is different, what else? @BBCWatcher @limster

https://www.blackrock.com/americas-offshore/en/products/307243/ishares-treasury-bond-0-1yr-ucits-etf

 

[reddevil0728]

I found this gem of an ETF, which is UCITS, so no worries about witholding tax etc. This is a good alternative to the 6 month TBill? Any pitfalls. okay I understand bond and a fund is different, what else? @BBCWatcher @limster

https://www.blackrock.com/americas-offshore/en/products/307243/ishares-treasury-bond-0-1yr-ucits-etf

T-bill got withholding text meh?

 

[revhappy]

T-bill got withholding text meh?

Dont know if T-bill fund got payout. Since fund is different from bill. Theoritically they could payout and then it will have 30% witholding tax.

 

[reddevil0728]

Dont know if T-bill fund got payout. Since fund is different from bill. Theoritically they could payout and then it will have 30% witholding tax.

so why not just buy T-bill direct?

 

[revhappy]

so why not just buy T-bill direct?

Okay, I finally bought it.
The trick was to place a bid slightly over the mid point and it got bought in an instant, I placed order for 59k and the entire thing got bought in 1 shot. The reason why I chose this particular bill is because it is on the run. It was issued yesterday, so the spread was the tightest. As the bill becomes older, the spread widens.

 

[milkfish]

Did you sub data? If not your midpoint may not be the most updated and may not be filled since it’s quite high volume.

just do market order? Since liquidity quite high

Data for bond (incl US-T) is free (auto subs) on IB, no?

 

[BBCWatcher]

Dont know if T-bill fund got payout. Since fund is different from bill. Theoritically they could payout and then it will have 30% witholding tax.

A U.S. domiciled fund could be(*) subject to 30% withholding tax on distributions (for residents of Singapore and other non-treaty jurisdictions who are not U.S. persons). The Irish domiciled U.S. Treasury funds are not subject to withholding tax either at the fund or shareholder level (for residents of Singapore). They may include boilerplate withholding tax language because other tax jurisdictions (not Singapore) may levy withholding tax.

(*) “Could be” because it’s technically possible for U.S. domiciled funds holding U.S. income tax exempt (for foreign shareholders) vehicles to do some special accounting to pass through the income tax exemption to foreign shareholders. But that’s not universal and probably not even common, and the broker-custodian has to be slightly savvy, too. Also, U.S. estate tax would still apply to the U.S. domiciled fund as I understand it, albeit not on a withholding basis.

 

[reddevil0728]

Data for bond (incl US-T) is free (auto subs) on IB, no?

Not real real time

 

[revhappy]

What I found interesting is the amount of leverage IBKR gives you for buying T-Bills. Not sure if leverage is the right word, rather how less of your margin is consumed to buy T-Bills. It is about 10%. So TBills are almost cash like.

But do remember margin rates are extremely high at 6% right now. So if you are planning to buy something else with your excess margin, you need to earn more than 6% over a year for it to be worthwhile.

 

[reddevil0728]

What I found interesting is the amount of leverage IBKR gives you for buying T-Bills. Not sure if leverage is the right word, rather how less of your margin is consumed to buy T-Bills. It is about 10%. So TBills are almost cash like.

But do remember margin rates are extremely high at 6% right now. So if you are planning to buy something else with your excess margin, you need to earn more than 6% over a year for it to be worthwhile.

Yea why not.

warren buffet also buy a lot of treasury

 

[boroangel]

It seems lot of talk on this thread about buying T Bills using IBKR but no action
I am planning to put 80K SGD into IBKR and convert to USD and then buy 6 month T-bills.
Current yield is around 4.7% which seems awesome.
Imagine if you try to replicate this with a USD fixed deposit with a Singapore bank, you get hit on both sides with commission and then you are locked in with penalties if you break early.

With IBKR, fx fee is like a fraction. commission to buy the bonds is 2bps.
Minimum size is $1000.

I just wonder on maturity, will the bond proceeds automatically be credited to our IBKR account?

Been buying US T-bills for quite a while now. comission is 5 USD per t-bill. After maturity, the amount goes back to my cash balance on IBKR.
However am buying very short term T-bills like those maturing every 1 to 2 months, rather than 6 or 1 year T-bills. Plan to buy 6 month and 1 year T-bills after I see the interest rates close to plateauing.

Right now, US - Tbill rates are quite close to DBS and UOB FD rates, but of cos in Singapore Banks USD is not insured but thats a whole separate discussion. I have both US Tbills and USD FD locally.

 

[boroangel]

Also thinking about it but tried typing US-T and too many options appeared hahah

I usually search by the Month in which T-bills will mature (say for example Feb 2023) and then take my pick from there.

 

[revhappy]

I usually search by the Month in which T-bills will mature (say for example Feb 2023) and then take my pick from there.

IBKR desktop app TWS has a bond scanner module. You can enter filters and select bonds. I noticed MS corp bond of 6 month residual maturity had only slightly higher yield than equivalent T bill, so I didn't bother. But for more savvy bond investors it is like a candy store.

Compare this with the tonnes of restrictions to buy SG bonds, FSM allows but then there are few retail bonds and most are institutional. Then there are liquidity issues.

Just curious have you considered other types of US bonds like Munis or Corp bonds?

 

[Danger21]

Been buying US T-bills for quite a while now. comission is 5 USD per t-bill. After maturity, the amount goes back to my cash balance on IBKR.
However am buying very short term T-bills like those maturing every 1 to 2 months, rather than 6 or 1 year T-bills. Plan to buy 6 month and 1 year T-bills after I see the interest rates close to plateauing.

Right now, US - Tbill rates are quite close to DBS and UOB FD rates, but of cos in Singapore Banks USD is not insured but thats a whole separate discussion. I have both US Tbills and USD FD locally.

Hi,

if it is 5 usd per t-bill, then is it still worthwhile to be doing it?? eg... 6 mth t bill yielding at 4.6% p.a, so for 6 mth at 1k t-bill, you get 23 usd... minus 5 usd you only get 18 usd... for cash idle at ibkr it is yielding at 3.3% pa. so 6 mth wise, i will be getting about 17 usd...

 

[revhappy]

Hi,

if it is 5 usd per t-bill, then is it still worthwhile to be doing it?? eg... 6 mth t bill yielding at 4.6% p.a, so for 6 mth at 1k t-bill, you get 23 usd... minus 5 usd you only get 18 usd... for cash idle at ibkr it is yielding at 3.3% pa. so 6 mth wise, i will be getting about 17 usd...

It is $5 commission per trade, whether you do $1k or $1million trade, the comission is the same.

 

[boroangel]

Hi,

if it is 5 usd per t-bill, then is it still worthwhile to be doing it?? eg... 6 mth t bill yielding at 4.6% p.a, so for 6 mth at 1k t-bill, you get 23 usd... minus 5 usd you only get 18 usd... for cash idle at ibkr it is yielding at 3.3% pa. so 6 mth wise, i will be getting about 17 usd...

As per what Rev mentioned, its fixed no matter how many units you buy, 50, 100, 200 etc. So yes the $5 is not too significant. But if one is buying a few units, then maybe need to check if its worth it or not.

 

[boroangel]

IBKR desktop app TWS has a bond scanner module. You can enter filters and select bonds. I noticed MS corp bond of 6 month residual maturity had only slightly higher yield than equivalent T bill, so I didn't bother. But for more savvy bond investors it is like a candy store.

Compare this with the tonnes of restrictions to buy SG bonds, FSM allows but then there are few retail bonds and most are institutional. Then there are liquidity issues.

Just curious have you considered other types of US bonds like Munis or Corp bonds?

No I try to keep my investments simple, Just T-Bills and FD since the interest is good enough for me. I am happy enough with anything above 4% to be honest so if T-bills and FDs yield over 5% its really a bonus.

Charles Schwab was really great for buying new issue of T-bills years back but they got absorbed by TD and no longer offers that in Singapore. Interface back then was simple and easy to understand.

Rest in equities.

 

[reddevil0728]

It is $5 commission per trade, whether you do $1k or $1million trade, the comission is the same.

As per what Rev mentioned, its fixed no matter how many units you buy, 50, 100, 200 etc. So yes the $5 is not too significant. But if one is buying a few units, then maybe need to check if its worth it or not.

I thought it's minimum 5 and no maximum?

 

[revhappy]

I thought it's minimum 5 and no maximum?

Upto 1million is $5. So for majoriy of us, I would imagine that is the maximum

 

[reddevil0728]

Upto 1million is $5. So for majoriy of us, I would imagine that is the maximum

i wouldn't necessary assume. so better be clear for the avoidance of doubts