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In this video, I will teach you exactly how to buy Treasury Bills from both Charles Schwab and Treasury Direct.
A Treasury Bill aka T-Bill is a U.S. government debt obligation backed by the Treasury Department, with a maturity of one year or less.
U.S. Treasury securities are issued by the federal government and, because they’re backed by the ”full faith and credit” of the U.S. government, are considered to be among the safest investments you can make.
This means that the U.S. government is expected to repay its bondholders.
They’re also among the most liquid—or actively traded—investments in the world.
Stay tuned until the end of the video to learn how to buy using a brokerage and also via Treasury Direct.
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⏰ Timestamps ⏰:
0:00 – Intro
0:35 – What is a Treasury Bill?
1:16 – Treasury Bill Yields
3:20 – How to Calculate Treasury Bill ROI
5:38 – How to buy T Bills via Charles Schwab
10:21 – Policygenius Spot
11:46 – How to buy T Bills via Treasury Direct
14:35 – My Thoughts
16:58 – LOL
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My mission is to provide my viewers with actionable content that enables them to create financial wealth. My videos reflect my real-world experience as a real estate investor, stock market investor, student of finance, and entrepreneur.
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Hey everybody welcome back to whiteboard Finance my name is Marco and I’m here to Help you master your money and build Your wealth thanks to policy genius for Sponsoring this video but more on that Later so today’s video I’m going to Teach you how to buy a treasury bill uh Whether it’s through treasury direct Straight from the government or you can Buy it through a brokerage like Charles Schwab which I’ll be using in this Example I’m also going to show you what A t-bill actually is so you’re going to Learn a quick definition of what it is Because some of you have heard of it but You may not know exactly what it is and Then also I’m going to show you how to Calculate the yield and how these yields Actually work and how the auction Process works for these so uh without Any delay let’s get right into it so a Treasury bill AKA T bill is a short-term Debt obligation backed by the U.S Treasury Department with a maturity of One year or less so these are typically Sold in denominations of a thousand Dollars you can actually reach a maximum Denomination of 5 million this third Bullet point is actually not true and I’ll show you why it is true most of the Time but not at time of this recording The longer the maturity date the higher The interest rate that the T bill will Actually pay to the investor right now
We’re looking at an inverted yield curve But that’s beyond the scope of this Video so let’s actually get into where To find these rates and to see what These things actually yield so this is Treasury direct.gov it’s an okay website The process is kind of antiquated for Buying but it’s actually very simple Some people love it some people hate it I personally am indifferent so these Tabs right here are actually showing you What the term is meaning the length of The duration of whatever you’re looking At so we have bills you have cmbs you Have notes bonds the tips frns you have A bunch of stuff here we’re going to be Focusing on bills in this video so Remember there’s bills these are less Than a year you have notes these are Basically two to ten years you have Bonds 20 to 30 years so we’re focusing On T bills these are less than a year Some people you know they look at their Savings account they’re like man I’m Only yielding you know two percent 2.2 Percent while inflation is you know Eight nine ten percent for example uh Some people have been looking into I Bonds which I most likely will make a Video about other people you know They’re scared to put their money in the Stock market right now so they’re Looking for something a little bit more Safer um with less return uh and uh less
Risk which this fits the bill uh no pun Intended oh t-bill okay hold on where’s My Never mind Sorry uh uh so what we’re doing here is We can see right here the term of the Bill so you have anywhere from basically Four weeks literally 28 days all the way To 26 weeks okay which is basically six Months So you have the ID number right here you Have the issue date when the bill is Issued and then you have the maturity Date so common sense if you look at one That’s issued on 10 18 28 Days Later is November 15th okay the investment rate Right here is basically your yield but Since this is whiteboard Finance you Can’t just be you know a dummy and not Know where these numbers are coming from So I’m going to show you how to figure This out so let’s say we’re looking at This past uh four-week auction so this One was issued on October 18th it is the 20th at the time or the 19th at the time Of this recording excuse me so this is Already done and uh issued so I’m going To click on that and we’re going to see How to figure out this interest rate and How these numbers actually work okay so We’re looking at the four week okay the Auction date was the 13th this is when You’re starting to bid on these bonds or These bills excuse me 18th is the issue
Date 15th is the maturity date this is The number that you actually pay this This is the important number so let me Zoom in here so this is the price you Pay in order to receive a hundred Dollars so you’re receiving at the end Of these four weeks a hundred bucks but It’s only costing you 99.74722 dollars okay so let’s keep this Number in mind uh 99.747222 so what we’re going to do here Is we’re gonna take a hundred dollars Minus 99.747222 that gives us this number Right here 0.25 okay so why am i showing You this and why does it matter because If you take this number this is Basically what you the interest or the Total money you’re making off a hundred Dollars over the course of four weeks so Yes you’re making literally 25 cents What you want to do is uh you wanna Divide this by 28 so you can get your Daily uh rate or your daily number which Gives you .009 you’re going to multiply This by 365 days in a year to annualize Is it and you’re going to actually Divide this by 99 point Seven four seven two two two To get this number right here I can’t Believe I remember that number So remember this number you move the Decimal place over once twice tens
Hundreds multiply it by a hundred this Should be the rate it should be 3.303 Percent so if we go back here what’s the Four week yielding boom 3.3 uh zero Percent So that’s how you figure it out the math You don’t need to do that but it’s Important to actually understand what You’re getting yourself into and what Your yield is going to be annualized Over the course of those uh four weeks Those 28 days that you’re holding this If you were to hold it for 365 days that Is the rate that you would get you’re Only holding it for 28 makes sense so Now we’re going to go into Charles Schwab and I’m going to show you how to Actually buy one of these things and This is going to be a lot easier than You know the math portion that I just Showed you so if you go to trade and you Go to bonds you have this on Fidelity You have this on TD Ameritrade you have This on Schwab there’s a bunch of Different ways you can do this it’s a Lot easier to buy it from the broker a Lot of these Brokers don’t have fees They’re not going to charge you anything To buy you know CDs bonds treasuries Things like that so uh what we have here Is Charles Schwab’s fixed income Offerings you have CDs these are Certificates of deposit you have the Time frame up top right here the
Duration and then you also have bonds You have treasuries you have government Agents sees you have corporates Municipals et cetera Etc what you want To do is you want to click down here in The bottom left hand and click on Treasury auctions and that’ll actually Take you to a page where they’re Offering new issues if you will so what You want to look at is new issues you Want to look at these offerings right Here so what this is basically showing You is pretty self-explanatory because We just kind of explained it so you have The auction date okay that’s the day That they’re going to basically figure Out what rates you’re going to get for These things the rate that we just used To figure out that 3.3 percent you’re Gonna have the maturity date okay which Is uh one month three days from now so Remember there’s an auction date there’s An issue date and then there’s a Maturity date these are 28 days some are Longer you have this one that could be An eight week eight week T-bill two months in one day and then You have tips which is not in the scope Of this video so just because I showed You the four week we’re going to stick To a four week so what you want to do is You want to click Buy And when you click buy it’ll actually Take you to the page that explains
Everything about this T Bill okay so you Can see here that the available cash to Trade in this account right now is Twenty nine hundred dollars remember These trade in increments of thousands Okay so I can buy one thousand two Thousand three thousand five hundred Thousand five million for example Um I’m just for the sake of this video I’m going to maybe I’ll even buy a Thousand I don’t know it’s only four Weeks out who cares so I’ll buy a Thousand dollars for my viewers okay Maybe you can like And subscribe and Send me money I don’t care I’m just Kidding so what you can do from here is You you have the ID number so you’ll be Able to see this in the future if you go Back to Um treasury direct.gov all of these have An ID number so you can see the um the Investment rates you can see the Maturity dates you can see a bunch of Stuff so what we’re gonna do is Um we’re gonna click on auto roll over Over so what this does is it’ll take the Proceedings or the money you make 28 Days from the issue date it’ll actually Automatically roll over so you can tell Schwab to automatically reinvest the Principle of your maturing CDs and Treasuries on your behalf into new Investments for when they mature it’s Going to be for the same maturity or the
Same duration so I’m going to make my Money the 3.3 percent annualized I’m Going to make that let’s just call it uh Two dollars and fifty cents on this Thousand bucks or whatever that number Is and it’s going to actually roll that Automatically into the next four weeks So if I choose to go that route that’s What it’ll do for the sake of this I’m Just going to click no because I don’t Want to tie up that much money for four Weeks for no reason if I’m gonna do this I’m gonna build probably a bond ladder Or a t-bill ladder I may just make a Video about that after this I’m not Gonna you know tie up any more money Into this if I don’t have to so this is Just to show show you how it works so You have a market order that’s the only Type of order you can do on this it’s no Different than buying stocks in a market Order this means you’ll get the price or The T bill at whatever interest rate is Dictated in the auction you have the Timing which is day only expires at the End of the day if it’s not filled and Then you just click review order so what That’s going to do is it’s going to Basically summarize everything you have A thousand bucks this is the ID Market Day trade Auto rollover no settlement Date 10 25 maturity uh November 22nd so That’s those 28 days makes sense So if I want to place this order I’ll
Come down here click place order make it Green order received there you go so you Have the order number all that good Stuff so that we just bought a thousand Dollars worth of a four week T Bill okay So uh what what you can can do if you Want to actually buy less than a Thousand uh you can go to treasury Direct which I’ll show you right now but Before that let’s hear a word from Today’s sponsor policy genius if you Have anyone relying on your income you Need life insurance it’s that simple Policy genius is your One-Stop shop to Find and buy the insurance you need at The right price it’s essential to have Life insurance because mortgage payments Child care and other expenses don’t Disappear When You’re Gone life Insurance through your workplace may not Be enough protection for your family’s Needs and it won’t follow you if you Leave your job my wife and I personally Use policy genius to find our life Insurance because if something were to Happen to us while traveling we know That our little girl and our family Would be covered policy genius was built To modernize the life insurance industry Their technology makes it easy to Compare life insurance quotes from top Companies like AIG and Prudential in Just a few clicks to find your lowest Price with policy genius you can find
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Dog daughter can buy 10 000 your Business can buy ten thousand your dog Can buy ten thousand your neighbor can Buy you know your dog your neighbor your Neighbor can but it’s not going to be Yours Um there’s a lot of ways that you can Actually invest in eye bonds but that’s Outside the scope of this video so if You do want to buy Um t-bills Okay you just click on buy Direct You click on bills remember these are Short-term Securities of one year or Less then you have notes which are two To ten years then you have bonds which Are more than 10 years you have tips uh Treasury inflated protected securities And then you have frns floating rate Notes uh Series E bonds here’s a series I Bond Um you know but for the scope of this Video we’re buying bills so what you get To is basically uh this menu so you have Way more options to buy t-bills so the Biggest difference between like a Regular brokerage like Schwab for Example and treasury direct is that you Don’t have to buy you can buy in Increments of 100 you don’t have to buy In increments of a thousand for example And then also you have a ton of options Okay so we have an auction date for Tomorrow the 20th with an issue date of
The 25th so that’s the one I’ll click on So you can see here you have the Purchase amount that you’re going to buy You have the source of funds where it’s Coming from uh you can reinvest that Again up to um two years if you want so Remember this is no different than Schwab’s ability to kind of just Reinvest those proceeds and keep doing That in perpetuity this is limited for Up to two years and then you have a Payment destination so if you choose not To reinvest that maturity payment you Can kind of pick where you want those Funds to go this is basically just the Bank account that you have linked to Treasury direct so what I’m going to do Is I’m going to purchase an amount of 100 for the sake of this video it’s Going to come from This bank account it’s going to go to This bank account and I’m going to click Submit so what you have now is a Purchase review so you’re going to see Your name or the trust or the business Or your spouse or whoever whoever’s Buying this thing you’re going to see The duration you’re going to see when The auction date actually happens you’re Going to see when it’s actually issued To you you’re going to see how much you Bought you’re going to see where the Funds are coming from you’re gonna see If you’re reinvesting it or not and
You’re going to see once it matures Where is that interest payment going So that’s pretty much how to buy Treasury bills you can do this for four Weeks you can do this for 26 weeks you Can do this for 17 weeks there’s a bunch Of different durations and a bunch of Different options but this is powerful If you want to earn more than what’s Sitting in your money market account for Example so right now I’m with Capital One 360 performance I think we’re Yielding 2.2 2.3 percent right around There you can see that the annualized Rate of return for the last four week Bond was 3.3 percent so that’s a pretty Significant jump up so if I want to put You know 100 Grand or if I had a million Dollars for example you know you can Make a quick you know 250 or 2500 in a Month uh not even a month it’s actually 28 Days by doing nothing and these are Typically I mean this is backed by the United States Treasury unless something crazy Or unforeseen would happen Um you know these are incredibly low Risk so if you’ve kind of been on the Sidelines of the stock market lately um With year-to-date being down you know Close to 20 percent uh and it’s freaking You out that’s actually a good time to Buy and I just keep dollar cost Averaging down I don’t really care what
The market does because I’m 34. Um but my point is I have a long time Horizon for stocks if you are freaking Out and you do want to park your money And earn more than what you’re earning In your money market or savings account Uh treasury bills are definitely a good Way to go I may make a video after this On how to actually do a ladder meaning You invest a certain amount of money Let’s call it a hundred thousand dollars Or ten thousand dollars Um and you have different expirations Mixed into that money it may not make Sense now but it’ll make sense when I Make the video so as always I hope you Got value from the video Um I just got back from a two-week Vacation in Europe it was awesome a Little bit jet lagged that’s why I Didn’t put out a video for you know a Week or two I wanted to spend time with My family and friends and just kind of Recover and relax Um but you know the YouTube algorithm is Calling so I got to get back on the Content creation hamster wheel so as Always I hope you got value from this Video check out the link down below I’m Still working on whiteboard Finance University was kind of offline for about Two two and a half weeks when I was on Vacation so I’m kind of hitting the Pavement hard and making sure that gets
Released uh sometime in Q4 this year Thank you so much everybody as always Have a prosperous day hey what’s going On dude Nothing man I just finished up with the Video what are you up to Oh you bought more growth stocks nice Dude What are you doing tonight Oh you’re going to the casino cool What are you playing Roulette oh nice worst size in the Casino Um what else is going on after that Oh you’re getting uh 700 a month car Payment cool Taking out some more loans wow that’s Crazy Oh what am I up to nothing just bought Some tea bills bro living on the edge That was so stupid [Music]