How to buy treasury bills in canada questrade
How to Buy Treasury Bills For Beginners 2023 (Easy 5% APY)
Timecodes:
in this video I'll show you exactly how
to buy treasury bills step by step by
the end of this video you'll note
everything you need to know about
t-bills as well as the high interest
rates that you guys can get on your
money and yeah with inflation these days
you do not want to have your money in a
normal checkings account rather put your
money to work and yeah right now T bills
are a great investment because they're
paying out very high interest rates so
we'll be covering a lot of different
things in this video if you want you
guys can pause the video on this slide
and see exactly what we're going to
cover yeah let's get started okay so
first what's our treasury bills treasury
bills also known as t-bills are
short-term debt Securities these are
issued and backed by the federal
government and yeah you guys probably
know this but when things are backed by
the governments this means they are much
lower risk Investments t-bills always
have short-term maturity rates and they
range from four weeks to one year the
most common maturity terms for T bills
are gonna be 4 8 13 17 26 and 52 weeks
right now the minimum investment amount
for treasury bills is one thousand
dollars now let's talk about how Tebow's
actually work and how they can make you
some money well when you buy a t-bill
you are basically giving a short-term
loan to the government the government
takes that money they use it however
they want and they pay you back with
interest at the end of the maturity term
so more specifically these T bills they
have a face value what you're going to
be doing is you're buying t-bills at a
discount this is called the discount
rate and then when the T Bill matures
you get your investment back plus the
discounted rate as your return so let's
say you're buying a t bill with a face
value of ten thousand dollars let's say
the discount rate on this bill is three
percent with a maturity term of 52 weeks
basically what's going to be happening
here is you're going to be buying the T
bill for nine thousand seven hundred
dollars right this is ten thousand minus
that three percent discount rate and
after one year when that t Bill matures
the government is going to basically pay
you back that 9 700 plus 300 so you'll
be getting your full ten thousand
dollars now what are the advantages of T
bills well first there's virtually zero
risk of losing your initial Investments
these are government relaxed so you know
the chances of it's not going through
are very very low they're also exempt
from local and state taxes and guys this
is a really really big one because when
you buy normal Investments like stocks
and crypto you're basically gonna be
paying federal and state taxes so if
you're high income earner and you're in
a state like California that's up to
like 13.3 percent so that's another big
advantage of T bills and the third thing
is that they can be bought in smaller
amounts than many other Investments so
this makes them very accessible to
retail investors now what are some
disadvantages of T bills the first is
that they have a lower rate of return
than some other Investments so if you
look at the Historical performance of
the stock market that's generally going
to be a little bit higher than T bills
but with inflation right now so high T
bills are actually paying out around
five percent interest but of course that
might change depending on when you guys
are watching this video they're also not
exempt from federal tax so this is not
you know a fully tax advantage
investment but that's not actually a big
disadvantage because of course you don't
need to pay state taxes like we talked
about and then third T those are bought
via getting through an auction process
so this can be competitive or
non-competitive and you might not
actually get what you want but I'll show
you guys later on this video how you
guys can actually go through this
process okay ultimately uh tebows
they're great for a specific purpose
right it's a very low risk accessible
and steady investment option right now
with treasury bill rates really really
high these are getting extremely popular
and lots of investors are parking their
cash in these types of Investments now
let's cover the differences between
bonds versus notes versus bills because
this is a question that I definitely had
and yeah it's definitely good to know so
t-bonds these are very long-term
Investments right they have maturity
rates of between 20 to 30 years they're
also known as long bonds these generally
have higher interest rates and basically
what's going to happen is you'll receive
fixed interest payments every six months
when you buy a t-bond now t-notes these
are a little bit shorter term but
definitely still longer than T bills
they have maturity rates of between two
to ten years and it's pretty similar to
t-bonds you get a bi-annual interest
payments and yeah historically 10 and
your t-notes have been really sought
after they've been a great balance
between risk and reward and they're
heavily used as a benchmark for setting
mortgage rates and then finally we have
t bills like I mentioned earlier these
are much shorter term investments and
right now with t-built interest rates at
around five percent they are an
extremely attractive investment option
now there are three main different ways
that you guys can invest in treasury
bills the first is directly through the
government by buying on Treasury direct
this is run directly by the US
Department of Treasury and on this
platform it's very easy to buy hold and
redeem treasury debt Securities the
second way to buy t-bills is through the
secondary Market you can buy tables on
most of the main online Brokers for
example Vanguard Charles Schwab Fidelity
TD Ameritrade and more and all these
platforms they offer new issue
treasuries without fees later on this
video I'll show you guys exactly how
that works and the third option is
instead of buying T bills directly you
can invest in ETFs that actually just
invest in t-build so let's talk a little
bit more about Treasurer direct this is
really great if you don't have a
brokerage account and are not looking to
set one up it's also good if you're
looking to hold treasuries until
maturity because you aren't allowed to
actually exchange them on Treasury
direct itself it's also a great place if
you want a safe virtually risk-free
platform for Investments and if you want
full ownership and control over your
treasuries here's what the treasure
direct website looks like I'm not going
to show you guys exactly how to you know
buy a t build step by step on this
platform but super easy and we'll link a
tutorial down the description below now
like I mentioned earlier another way to
buy treasury bills is through an online
broker and this might be good for you if
you want to buy and actually sell
treasuries instead of actually waiting
to the maturity date it's also good if
you want to use your own treasuries
towards the buying power of other
Securities you can purchase from a
higher pool of treasuries that are being
sold right before maturity or it's also
good if you don't want to open up a
treasury direct account see a lot of you
guys might already have access to an
online broker like Vanguard or Charles
Schwab and yeah you can directly Buy
treasuries on your existing platform and
the Third Way is of course buying ETFs
this is really really easy it's just
like buying stocks allows you to hold
basically treasuries with more liquidity
because of course you can sell that ETF
anytime you want or if you want to
invest in a broader treasury market than
just one or a few treasuries alone right
like a lot of these treasury ETFs they
also hold bonds and notes as well here's
some of the more popular treasury ETFs
that you guys can consider all of these
are going to be available to purchase on
any stock platform so yeah if you want
to use something like Weeble or MooMoo
that's going to work but if you guys
haven't gotten Weeble or Mumu yet
they're actually giving away a ton of
free stocks when you guys use my link
down below and I highly highly encourage
you guys to claim those free stocks
because these promotions don't last
forever so right now I'm going to show
you guys what it looks like to buy one
of these ETFs on Weeble so basically
what you're going to do is you're going
to come here go to search and let's look
up obil we'll click on this you guys can
see the price chart here you guys can
learn more about it but if you basically
just want to trade it you can click here
trade we can set the order type so let's
just do a market order for this video
except the quantity so let's say we want
to buy three and then click buy right
there now I'm going to show you guys how
to actually look up the auction schedule
for treasury bills so we'll link this
down below but based basically if you go
to home.treasury.gov you'll be able to
find this auction schedule and you'll
see when these bills are being sold I'm
not going to go too much into detail
over this but basically you'll see the
security type you'll see the
announcement date the auction start date
as well as the final settlement dates
for that treasury security yeah you guys
can scroll through here find the
investment that you guys want and see
when the next auction Starts Now this
next section I'm going to show you guys
how to buy treasury bills at auction
which is actually the way that I
recommend doing this I'll show you guys
how to do this on vanguard.com but the
process is very similar no matter what
platform you guys are using so I'm here
in my brokerage account and what I'm
going to do is come here to transact and
what we're going to do is come down here
to trade bonds we'll select the account
that we want to purchase them in Click
continue and then what we're going to do
is come here to treasuries make sure you
select auction right here and this is
going to show us the different treasury
bills notes and bonds that we can buy
now as you guys can see all these
treasury bills are not yet available to
buy as I'm filming this video so we
don't have any buy buttons right here
but you guys can see some of the notes
and bonds are available now with the
rates right now these bills are the best
option probably and what you're going to
want to do is look at the auction open
right here this is when the auction is
going to start for that particular bill
so let's say we want to buy a two-month
us treasury bill we're going to come
here we'll see that the auction opens
for this on March 7th 2023 and the
auction cut off time is March 9th at 12
a.m eastern time now over here on the
very right that's going to be the
indicative yield and you can sort of
think of that as the apy for this
investment now in this one they aren't
showing it but we should be able to see
that once the auction opens for example
down here for the three-year U.S
treasury note you guys can see the
indicated yield is 4.604 percent and
yeah once this auction opens there's
going to be the buy button right here
and you'll be able to click on that and
easily purchase the quantity that you
want for example I know this is not the
actual T bill that we want but I was
able to click Buy on this one and then
select the order amount and then click
continue now like I said earlier T bills
are one of the safest Investments that
you guys can make but this does not mean
that there are absolutely risk-free so
let's discuss what some of those risks
are the first is the market risk so when
the economy is really good or we are in
a bull market stocks may actually become
a better investment because they often
return greater returns and in a market
like this T bills are going to be less
attractive the second is opportunity
cost right so with lower returns for T
bills you're potentially missing out on
better returns elsewhere right now in
today's economy T bills have very high
interest rates and that's why a lot of
people are storing their money in
t-bills rather than stocks right now so
third is inflation right and when we
have really high inflation this is going
to eat into the profits that come with
t-bill Investments and fourth with
Rising interest rates there may be more
attractive interest-based Securities
elsewhere so right now with interest
rates really high you can often get
similar returns by just putting your
money into online savings accounts and
that just means that you're skipping out
on the hassle of having to buy t-bills
now what causes treasury bill rates to
fall this happens when the discount rate
doesn't keep up with the inflation rate
higher interest rates lead to investors
seeking higher yield investment and your
overall inflation poses the greatest
risk to t-bill values so now that we've
covered the fundamentals of treasury
bills are they good investment well in
my opinion yes T bills are a good
investment especially right now they're
very very low risk right they're backed
by the government it's a very simple
investment to make as I showed you guys
the whole concept of tea bills is very
very simple and it just makes sense and
yeah typically in Bear markets or when
the economy is not doing as well that's
when tebows and other treasuries aren't
really sought after so let's talk about
the actionable steps that you guys can
take right now first you'll want to
determine how much money you want to
invest and although tivo's are much much
safer than investing in stocks and
crypto and other things just be aware
that any investment has some type of
risk then you'll want to determine how
you want to invest in t bills do you
want to directly purchase t-bills until
maturity just want to buy and sell T
bills on the secondary Market or do you
want to invest in t bills through ETFs
then you're going to want to determine
where you want to invest so either
through Treasure direct through an
online broker or just by buying the ETF
on whatever stock platform yeah that's
basically how you buy treasure bills
right now we're in a very interesting
time when treasuries are paying higher
rates than CDs this is often not the
case but in today's economy that's just
what's happening yeah that's why I hold
a lot of my money currently in
treasuries now the way that I recommend
buying treasuries like I showed you guys
is not by buying on the secondary Market
when you're doing this you're paying
higher fees and since T bills are
offered on auction so frequently that's
why I recommend just wait until the
auction date becomes available and buy
new issue treasuries it's super easy and
it literally just takes a couple of
minutes yeah go look at the auction
dates figure out which treasury bill
works for you yeah just buy new issue
treasuries directly on your online
brokerage account that for me is the
easiest way but of course if you want
the lower minimum of a hundred dollars
to invest then you can of course Buy on
Treasury direct yeah anyways I hope you
guys got some value from this video feel
free to reference this video at any time
and yeah happy happy investing if you
guys enjoyed the video make sure to hit
that like button and also subscribe for
more content just like this I make a ton
of content about investing personal
finance and Entrepreneurship thank you
so much for your time I'll see you in
the next video peace
Related queries:
how to buy treasury bills in canada
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