Assuming one likes the yields of T-Bills and that's the *base* case. (i.e. Barring something superior, would invest in 1-6 month T-Bills).
T-Bills offer many good features, including super-liquidity and state-tax free.
But, what if one is investing in a non-taxable account (IRA), and one doesn't likely need that liquidity, over the short holding period of the T-Bills.
Is there a good alternative that trades off those two features for a slightly higher yield? Agencies, CDs, short term (investment-grade) corporate, etc?
One issue I see is that if any of the latter are filtered through a money market fund, relatively high expense ratios may eat up the theoretical yield benefit. And T-Bills, at Schwab (the brokerage in question) are commission free to buy, which isn't true for some other possibilities. When buying for very short maturities, even small-ish commissions can significantly dent the yield.
I'm also well aware of (potential) callability issues, even at very short terms.
So, is there a way to squeeze out an extra, say, 10-30 bp of yield, relative to T-Bills?
T-Bills offer many good features, including super-liquidity and state-tax free.
But, what if one is investing in a non-taxable account (IRA), and one doesn't likely need that liquidity, over the short holding period of the T-Bills.
Is there a good alternative that trades off those two features for a slightly higher yield? Agencies, CDs, short term (investment-grade) corporate, etc?
One issue I see is that if any of the latter are filtered through a money market fund, relatively high expense ratios may eat up the theoretical yield benefit. And T-Bills, at Schwab (the brokerage in question) are commission free to buy, which isn't true for some other possibilities. When buying for very short maturities, even small-ish commissions can significantly dent the yield.
I'm also well aware of (potential) callability issues, even at very short terms.
So, is there a way to squeeze out an extra, say, 10-30 bp of yield, relative to T-Bills?
Statistics: Posted by psteinx — Mon Sep 02, 2024 9:51 am — Replies 0 — Views 105