Outstanding Opportunity in Short-Term Treasuries
Who can benefit from this opportunity?
Individuals with excess cash – earning very little in a bank or savings account and do not need the funds in the very near term.
Business owners – built up cash reserves which will not be expended in the next year or longer. If your account is just offsetting bank fees this may be an option.
Nonprofits – entities that have cash reserves that are not currently being invested.
Fixed income allocation – in a rising rate, owning individual bonds may better preserve capital and hedge interest rate risk. This could be used as a part of a fixed income allocation in a LT diversified portfolio.
How do you get access?
If this strategy is appropriate, Treasuries can be bought in two main ways:
1. Brokerage Account: ideal for individuals or entities (for-profit and non-profit)
a. Taxable account
b. Retirement account
2. Directly from US Treasury – VIA www.treasurydirect.gov
a. Open an account at the website
General Comments:
Must be bought in $1,000 increments.
T-Bills are bought at a discount and face value is rec’d at maturity.
There may be fees to purchase on both sites.
Background on Treasuries
Backed 100% by the full faith and credit of the US Government.
Highly liquid market – US Treasuries have the widest and deepest markets in the world.
Full liquidity – do not need to hold to maturity or to full-term. Can sell on the open market at any point, subject to market pricing.
No credit risk – All US Treasuries are backed by the full faith and credit of the US government. The yield on the 90-day T-Bill is considered to the “Risk-Free” rate of return.
Interest rate risk – any bond instrument is always subject to interest rate risk. By investing in short dated US treasuries, this risk is mitigated, but not gone.
Contact Info
Looking for more information on short-term treasuries? Contact Amit Thakkar, Founder of Elevation Investment Consulting.
Additional Resources