📢 We've launched! Get 15% off our brand-new bond courses thru 11:59PM ET on 4/30/2024 for Financial Literacy Month - enter coupon code bondfans2024 at checkout - see links below for more details! ⭐ Bond Beginners (our foundational-level bond course): www.diamondnestegg.com/bond-beginners ⭐ Bond Masters (our intermediate-level bond course): www.diamondnestegg.com/bond-masters ⭐ Or get both & save $100: www.diamondnestegg.com/home#_paa2isucf ⭐ Join our super-supersaver membership for regular market updates & monthly live member Q&As 👉 ruclips.net/channel/UCnexoc6tvesvcCEzZhmI-Agjoin Thanks for visiting our personal finance channel! We hope this content will help fast-track your financial journey! Everyone's financial journey is different. Please note that: 1) there are questions/ comments which I will not be able to answer without fully understanding your financial, personal & other circumstances & 2) we will not ask you to call us or send us money in the comments on this channel or any of our other social media accounts, so if you see comment(s) along those lines, it is most likely spam - PLEASE DO NOT ENGAGE WITH SPAMMERS OR GIVE OUT YOUR PERSONAL INFORMATION FOR YOUR OWN SAFETY.
IMO, The biggest disadvantage of buying at secondary, is that often the min. Required is high, sometimes $10k, often $100k, so it takes a while to find a bond with a low min., and if found, it has a lower yield
Would really be nice if you did a video on secondary market TIPS. A bit more complicated, but that would make it all the more valuable to us Super Savers.
This was a very well done presentation and it addressed the key points. I have been buying on the secondary market through Fidelity and E*Trade. Both work in very similar fashion. Most of the Treasuries purchased have about a year left to maturity. But with the secondary market I can shop for desired YTM and look in the book depth to see if they will sell in the quantities I need.
I was able to get a fixed annuity through my employer at 7.6% at retirement, and I like having that guaranteed income on top of my pension. These longer term Notes, partially tax exempt ,at or near 5%, are a very attractive substitute for an annuity. As an added bonus, your initial investment is eventually returned to you.
Thank you for an informative video. I am still more comfortable in just buying and laddering TBills at aution right now as I just started in the beginning of the year.
Great video! If I purchase a UST note or bond at a significant discount to PAR on the secondary market--- will that difference be treated as a capital gain? (assuming I hold until maturity). IRS PUB 550 is a bit unclear.
Thanks for this intro, Jen. Thinking of exploring the secondary market offerings when we had those surges on note and bond yields to see what Merrill's asking for re price and how much they want to purchase. Yes, more secondary market videos, please
Good overview, Jennifer! 👍 You mentioned that the prices on the second markets can change in the span of clicking through screens on your broker’s website. Consider too that the value of the purchase will continue to wibble and wobble the entire time of ownership, until maturity. That up and down oscillation could drive some people batty, especially if they are logging in every day. There is no price oscillation on TreasuryDirect. I don’t think it would bother me too-too much, especially if I was planning to hold to maturity. Still … something to consider.
When buying a treasury at discount to par, and held to maturity, that portion is subject to state tax. So a buyer might want to buy the treasury at par, and avoid this situation. I'm trying to ascertain that the tax is just that portion (below par) and not all the interest payments too.
Have been buying large amounts of 30 day T bIlls off the secondary through Fidelity for some time now and have had no issues. Might try a Auction but never did like the not knowing numbers.
I’ve bought several from the secondary market & have been quite please. Yes I’m trying to get out further, but the yield on those shorter term notes are quite tempting 😊. Thank you again Jen. Really great well done videos you create 👍
Last week, the aution of the 30 year treasury can only sell 85%, the dealer have to take back the unsold 15 %. Can you explain what happened to the unsold treasuries ?
Another timely, well informative and well executed presentation. Just at the point of considering going longer (2-5 year notes). Watching supply, demand and Yellon's tweaking on new debt issuances. YES, please do make more secondary issue tutorials. Thanks!
I agree that buying secondary market makes sense if you're looking into the longer end of the yield curve. However the current longer-term bond yields are not attractive enough in my opinion to take the risk and HOLD it until maturity (unless you're going to sell it again for price appreciation which is a different story). Then in that case one might as well consider buying local muni in the same long-term duration and get the tax-exempt benefit especially in high personal income state like CA. Nice video, been thinking a lot about secondary market and this makes it easier for me to see where I stand.
1)Can you buy us securities with a credit card? Personal and/or business? 2)If so, are there fees or limits? The us treasury website seems to say that you can (in my unprofessional opinion). You're such a rock star and so I thought you might shed some certainty on this , maybe even from experience
Thank you for another well-thought video with a balanced exposition of the pros and cons of the secondary market and at-auction purchases. Your tables are amazing! The higher coupon of treasuries bought at auction may compensate for the potential lower yield, in my opinion, of course, if the difference is not significant. I rather receive the interest over the life of a note or bond than mostly at maturity.
Thank you for another great instructional. I am thinking that if you are buying at auction at regular intervals, sometimes you come out a little ahead, sometimes a little behind, but add them all together and maybe there is no overall advantage or disadvantage?
@@DiamondNestEgg Thank you, that's just how I was thinking about it. I have ladder maturities every 4 weeks, then reinvest, but splitting off a certain % each time for long term notes so the portfolio slowly converts to LT.
I'm a fan! I would like to suggest making a tutorial on selling a treasury on the secondary market and understanding how that works. A rep at Vanguard told me that I could potentially sell a treasury that I purchased on Treasury Direct, but that would require moving the treasury to Vanguard; it sounded complicated. It seems like the advantage to buying a treasury with Vanguard, or Fidelity, etc. is that you could easily sell it. Let me know if you have, in fact, already made a tutorial about this. I did not see it. Love your clarity, so helpful.
I piddle around with treasuries not as much to build some sort of income stream, rather to rake in a greater amount of small funds that surpass whatever I would be getting from those oft advertised "HYSA"'s from large banks. In other words, to get the full measure of interest from the primary sources rather than accepting the pittance the bank may decide to give... I am a regular with secondary market treasuries on Fidelity, but only the ones that are closer to maturity. If I were interested in the higher interest rate notes/bonds, then I would go through TD new auctions, but the wait is not in my future. The small returns I get from the maturing secondary market ones more than suffice to assuage whatever profit desire I may have at the time. The process to do it this way can be time consuming and tedious, but that's actually what excites me the most.
Really love your videos! Can you explain why Treasury funds like TLT yields less than the actual bond? Is it because of the expense ratio needed to run the fund?
Great video. Thank you! I have been buying shorter term t bill at secondary for my ladders as well since the coupon offered and overall gain was better than the auction. How can one do the due diligence to compare the shorter t-bills at secondary vs auction?
When buying on secondary market, should I be looking at Coupon rate or YTM ?? For older notes/bonds, the coupon rate is lower, but the yield is on par with new issues... I am ok to hold till maturity... Thank you
I dont understand the strategy or how to purchase/sell a new bond with intention to sell prior to maturity when rates decline - with goal to make a profit. Is this in the domain of individual self directed investors?
Hi, Jennifer, I’m trying to buy a municipal bond on the secondary market with a discount at fidelity. The instructions popped out to worn me that “if a municipal bond is purchased at significant discount, the principal gain are subject to ordinary income tax rather than capital gain tax. Could you let me know how big a discount is considered as “significant “ . And also, should one pay federal tax if he bought a municipal bond at discount?
There seems to be a lack of 30 and 60 day T-Bill auctions available to me on etrade. I have been laddering them for about a year with no issue, varrying the length of maturity in order to meet my ladder goals, but this week I have noticed a lack of choices with respect ot 4, 8, 13, 17 week T-Bills available to ladder. Is there something going on?
I haven't been on E-Trade recently to purchase T-Bills & this is the first time I'm hearing about this. I would suggest that you call them this coming week if you don't see anything on the announcement date. These maturities have been available on Fidelity & Schwab this week.
Someone please explain to me what the motivation is to buy bonds on the secondary market, if the interest rate is lower than what you can get at auction?
The key point is that with such volatility in the bond market, and with auctions being spaced farly far apart for longer dated bonds, buying on the secondary market when peaks occur can result in higher yields.
📢 We've launched! Get 15% off our brand-new bond courses thru 11:59PM ET on 4/30/2024 for Financial Literacy Month - enter coupon code bondfans2024 at checkout - see links below for more details!
⭐ Bond Beginners (our foundational-level bond course): www.diamondnestegg.com/bond-beginners
⭐ Bond Masters (our intermediate-level bond course): www.diamondnestegg.com/bond-masters
⭐ Or get both & save $100: www.diamondnestegg.com/home#_paa2isucf
⭐ Join our super-supersaver membership for regular market updates & monthly live member Q&As 👉 ruclips.net/channel/UCnexoc6tvesvcCEzZhmI-Agjoin
Thanks for visiting our personal finance channel! We hope this content will help fast-track your financial journey! Everyone's financial journey is different. Please note that: 1) there are questions/ comments which I will not be able to answer without fully understanding your financial, personal & other circumstances & 2) we will not ask you to call us or send us money in the comments on this channel or any of our other social media accounts, so if you see comment(s) along those lines, it is most likely spam - PLEASE DO NOT ENGAGE WITH SPAMMERS OR GIVE OUT YOUR PERSONAL INFORMATION FOR YOUR OWN SAFETY.
IMO, The biggest disadvantage of buying at secondary, is that often the min. Required is high, sometimes $10k, often $100k, so it takes a while to find a bond with a low min., and if found, it has a lower yield
Have to look at the book depth. Often you’ll find a price/quantity point which meets your needs, albeit at a slightly reduced YTM.
Yes, usually only takes a few seconds and often the YTM differs by less than 1/10th of a percent.
Can you show t note transaction on Charles Schwab.
Would really be nice if you did a video on secondary market TIPS. A bit more complicated, but that would make it all the more valuable to us Super Savers.
This was a very well done presentation and it addressed the key points. I have been buying on the secondary market through Fidelity and E*Trade. Both work in very similar fashion. Most of the Treasuries purchased have about a year left to maturity. But with the secondary market I can shop for desired YTM and look in the book depth to see if they will sell in the quantities I need.
I was able to get a fixed annuity through my employer at 7.6% at retirement, and I like having that guaranteed income on top of my pension. These longer term Notes, partially tax exempt ,at or near 5%, are a very attractive substitute for an annuity. As an added bonus, your initial investment is eventually returned to you.
Excellent video. The clarity and visuals of your examples are super helpful.
Thank you for an informative video. I am still more comfortable in just buying and laddering TBills at aution right now as I just started in the beginning of the year.
Hopefully you will show us in the future what you are buying in the secondary maket :)
Great video! If I purchase a UST note or bond at a significant discount to PAR on the secondary market--- will that difference be treated as a capital gain? (assuming I hold until maturity). IRS PUB 550 is a bit unclear.
Thanks for this intro, Jen. Thinking of exploring the secondary market offerings when we had those surges on note and bond yields to see what Merrill's asking for re price and how much they want to purchase. Yes, more secondary market videos, please
Good overview, Jennifer! 👍 You mentioned that the prices on the second markets can change in the span of clicking through screens on your broker’s website. Consider too that the value of the purchase will continue to wibble and wobble the entire time of ownership, until maturity. That up and down oscillation could drive some people batty, especially if they are logging in every day. There is no price oscillation on TreasuryDirect. I don’t think it would bother me too-too much, especially if I was planning to hold to maturity. Still … something to consider.
When buying a treasury at discount to par, and held to maturity, that portion is subject to state tax. So a buyer might want to buy the treasury at par, and avoid this situation. I'm trying to ascertain that the tax is just that portion (below par) and not all the interest payments too.
Have been buying large amounts of 30 day T bIlls off the secondary through Fidelity for some time now and have had no issues. Might try a Auction but never did like the not knowing numbers.
I’ve bought several from the secondary market & have been quite please. Yes I’m trying to get out further, but the yield on those shorter term notes are quite tempting 😊. Thank you again Jen. Really great well done videos you create 👍
Great video as usual. Yes, I’m interested in learning more on purchasing notes on the secondary market. Thanks!!!
Last week, the aution of the 30 year treasury can only sell 85%, the dealer have to take back the unsold 15 %. Can you explain what happened to the unsold treasuries ?
I have learned so much watching your videos. It would be great if you can do a video for purchasing notes/bonds in the secondary market.
We have for Fidelity already & will do more in the new year for the other brokerage companies!
Another timely, well informative and well executed presentation. Just at the point of considering going longer (2-5 year notes). Watching supply, demand and Yellon's tweaking on new debt issuances.
YES, please do make more secondary issue tutorials.
Thanks!
I agree that buying secondary market makes sense if you're looking into the longer end of the yield curve. However the current longer-term bond yields are not attractive enough in my opinion to take the risk and HOLD it until maturity (unless you're going to sell it again for price appreciation which is a different story). Then in that case one might as well consider buying local muni in the same long-term duration and get the tax-exempt benefit especially in high personal income state like CA. Nice video, been thinking a lot about secondary market and this makes it easier for me to see where I stand.
1)Can you buy us securities with a credit card? Personal and/or business?
2)If so, are there fees or limits?
The us treasury website seems to say that you can (in my unprofessional opinion).
You're such a rock star and so I thought you might shed some certainty on this , maybe even from experience
excellent video!
Thank you for excellent nfo
Thank you for another well-thought video with a balanced exposition of the pros and cons of the secondary market and at-auction purchases. Your tables are amazing! The higher coupon of treasuries bought at auction may compensate for the potential lower yield, in my opinion, of course, if the difference is not significant. I rather receive the interest over the life of a note or bond than mostly at maturity.
Thanks for sharing Armando
Thank you for another great instructional. I am thinking that if you are buying at auction at regular intervals, sometimes you come out a little ahead, sometimes a little behind, but add them all together and maybe there is no overall advantage or disadvantage?
I would say the more "regular" the intervals are, the more likely it should even out (like dollar-cost-averaging)
@@DiamondNestEgg Thank you, that's just how I was thinking about it. I have ladder maturities every 4 weeks, then reinvest, but splitting off a certain % each time for long term notes so the portfolio slowly converts to LT.
Very well done! Personally, in this environment, I am not comfortable buying anything longer than 52 weeks, at auction.
I'm a fan! I would like to suggest making a tutorial on selling a treasury on the secondary market and understanding how that works. A rep at Vanguard told me that I could potentially sell a treasury that I purchased on Treasury Direct, but that would require moving the treasury to Vanguard; it sounded complicated. It seems like the advantage to buying a treasury with Vanguard, or Fidelity, etc. is that you could easily sell it. Let me know if you have, in fact, already made a tutorial about this. I did not see it. Love your clarity, so helpful.
I piddle around with treasuries not as much to build some sort of income stream, rather to rake in a greater amount of small funds that surpass whatever I would be getting from those oft advertised "HYSA"'s from large banks. In other words, to get the full measure of interest from the primary sources rather than accepting the pittance the bank may decide to give... I am a regular with secondary market treasuries on Fidelity, but only the ones that are closer to maturity. If I were interested in the higher interest rate notes/bonds, then I would go through TD new auctions, but the wait is not in my future. The small returns I get from the maturing secondary market ones more than suffice to assuage whatever profit desire I may have at the time. The process to do it this way can be time consuming and tedious, but that's actually what excites me the most.
I really hope you cover the point if it is the time to take a plunge in to Bonds at this time for my steady retirement income. Waiting!
@@eh7599 Right now I see 5yr cds on Schwab at 5.6% and 5.388 (callable) . Top non-callable is 4.75. Did you use Schwab ? Thanks.
What an excellent video
Really love your videos! Can you explain why Treasury funds like TLT yields less than the actual bond? Is it because of the expense ratio needed to run the fund?
Interested in more on long term bonds on secondary market with example and/or fixed investment in general. Thanks!
Great video. Thank you! I have been buying shorter term t bill at secondary for my ladders as well since the coupon offered and overall gain was better than the auction. How can one do the due diligence to compare the shorter t-bills at secondary vs auction?
I think I like to buy at an auction. Thanks
After holding the bond for three months, how often the interests earnings are added to the account, every month, every six months, etc.?
I buy on the secondary market exclusively. You just have to LOOK and wait for the best buys.
When buying on secondary market, should I be looking at Coupon rate or YTM ??
For older notes/bonds, the coupon rate is lower, but the yield is on par with new issues... I am ok to hold till maturity... Thank you
I dont understand the strategy or how to purchase/sell a new bond with intention to sell prior to maturity when rates decline - with goal to make a profit. Is this in the domain of individual self directed investors?
Noted - will add this to our video list
So...can you lose money from a treasury auction?
Hi, Jennifer, I’m trying to buy a municipal bond on the secondary market with a discount at fidelity. The instructions popped out to worn me that “if a municipal bond is purchased at significant discount, the principal gain are subject to ordinary income tax rather than capital gain tax. Could you let me know how big a discount is considered as “significant “ . And also, should one pay federal tax if he bought a municipal bond at discount?
There seems to be a lack of 30 and 60 day T-Bill auctions available to me on etrade. I have been laddering them for about a year with no issue, varrying the length of maturity in order to meet my ladder goals, but this week I have noticed a lack of choices with respect ot 4, 8, 13, 17 week T-Bills available to ladder. Is there something going on?
I haven't been on E-Trade recently to purchase T-Bills & this is the first time I'm hearing about this. I would suggest that you call them this coming week if you don't see anything on the announcement date. These maturities have been available on Fidelity & Schwab this week.
Prefer secondary market for anything over 2 years. Auctions good for a t-bill ladder.
Someone please explain to me what the motivation is to buy bonds on the secondary market, if the interest rate is lower than what you can get at auction?
The key point is that with such volatility in the bond market, and with auctions being spaced farly far apart for longer dated bonds, buying on the secondary market when peaks occur can result in higher yields.