Treasury Bond Buying Tutorial

Discussion of the Bond portion of the Permanent Portfolio

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blue_ruin17
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Re: Treasury Bond Buying Tutorial

Post by blue_ruin17 » Sun Aug 14, 2016 11:35 pm

ochotona wrote:
blue_ruin17 wrote:Is there an equivalent tutorial for buying Federal Bonds in Canada? I've searched google and it puzzles me that I can't find a single guide in this regard.
Quote from a friend in Calgary:

"Not available to public through auction (primary market). Can buy 100% Fed bonds through ETFs from BMO: ZFL, ZFM, ZFS (traded on TSX) or on the secondary market through broker. Unless they are buying over $100,000 it's best to stick with ETF option. Other government bond ETFs are available but have provincial or agencies paper adding to the risk."
Ahh, I see. Thank you...

I will call my Brokerage and ask them if they sell Long Federal Bonds on the secondary market.

If not, ZFL seems like the best Long Bond ETF for Canadians. But holding them directly is obviously preferable.
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HappyMan
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Re: Treasury Bond Buying Tutorial

Post by HappyMan » Mon Jul 02, 2018 10:24 pm

Hi,

I am still learning how to play with bonds. Am I correct in assuming that selling them is as easy as buying? I will keep the earnings for the period of holding them, right?

Thanks,
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sophie
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Re: Treasury Bond Buying Tutorial

Post by sophie » Tue Jul 03, 2018 7:52 am

Selling Treasuries can be a bit complicated and it depends on where you're holding them.

Treasury Direct: you can't sell them on the site. You have to transfer them to a brokerage account and then sell. I've never tried to do this as I only use this account for savings bonds.

Fidelity: Very easy! Expand the bond in the "positions" view and hit the "sell" button. There is no fee to buy or sell, but be aware that there is a bid-ask spread, so there is a cost involved. If you own, say, 10 $1000 bonds and want to sell 5 of them, take care to enter "50" in the sell amount as bonds values are calculated in $100 lots.

Other brokerages (Vanguard, Schwab) charge a fee to sell a bond. Especially beware of Ally Bank's TradeKing investment account, where the fees can be as high as $50 a bond (not the advertised $1) and apply to buying and selling.

Some brokers (Ally Bank's TradeKing) do not allow you to sell a bond online, only by phone. Vanguard and Schwab used to, but both now allow you to sell bonds through the website (per their website; I haven't tried it).
HappyMan
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Re: Treasury Bond Buying Tutorial

Post by HappyMan » Tue Jul 03, 2018 9:56 am

Thank you. Forgot to mention that I am with Schwab. Will check their fees.
sophie wrote:
Tue Jul 03, 2018 7:52 am
Selling Treasuries can be a bit complicated and it depends on where you're holding them.

Treasury Direct: you can't sell them on the site. You have to transfer them to a brokerage account and then sell. I've never tried to do this as I only use this account for savings bonds.

Fidelity: Very easy! Expand the bond in the "positions" view and hit the "sell" button. There is no fee to buy or sell, but be aware that there is a bid-ask spread, so there is a cost involved. If you own, say, 10 $1000 bonds and want to sell 5 of them, take care to enter "50" in the sell amount as bonds values are calculated in $100 lots.

Other brokerages (Vanguard, Schwab) charge a fee to sell a bond. Especially beware of Ally Bank's TradeKing investment account, where the fees can be as high as $50 a bond (not the advertised $1) and apply to buying and selling.

Some brokers (Ally Bank's TradeKing) do not allow you to sell a bond online, only by phone. Vanguard and Schwab used to, but both now allow you to sell bonds through the website (per their website; I haven't tried it).
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