Treasury Direct for large sums

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Jeffreyalan
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Treasury Direct for large sums

Post by Jeffreyalan » Thu Mar 15, 2018 10:52 am

Hello all,

I have an inheritance coming and I would like to keep it as safe as possible. So I am thinking of buying Treasury bills with it. Perhaps rolling 1-2 year ones. Does everyone here feel comfortable placing a decent amount of funds in Treasury Direct? I have no reason to not feel safe with them other than the psychological fact that they do not provide statements or have any phone app etc.

Thank you all for your opinions in advance!
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Kriegsspiel
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Re: Treasury Direct for large sums

Post by Kriegsspiel » Thu Mar 15, 2018 11:51 am

Jeffreyalan wrote:Hello all,

I have an inheritance coming and I would like to keep it as safe as possible. So I am thinking of buying Treasury bills with it. Perhaps rolling 1-2 year ones. Does everyone here feel comfortable placing a decent amount of funds in Treasury Direct? I have no reason to not feel safe with them other than the psychological fact that they do not provide statements or have any phone app etc.

Thank you all for your opinions in advance!
I have money rolling over every 4 weeks there. No issues.
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jhogue
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Re: Treasury Direct for large sums

Post by jhogue » Thu Mar 15, 2018 1:07 pm

Treasury bills held in your name at Treasury Direct are about as safe, stable, and liquid as you can get. Two possible things to consider:
1. It has never bothered me, but some people think Treasury Direct's website is clunky and unreliable.
2. You cannot establish an IRA through Treasury Direct. For that, you have to use a brokerage account like Fidelity, Vanguard, etc.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
Jeffreyalan
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Re: Treasury Direct for large sums

Post by Jeffreyalan » Thu Mar 15, 2018 1:37 pm

jhogue wrote:Treasury bills held in your name at Treasury Direct are about as safe, stable, and liquid as you can get. Two possible things to consider:
1. It has never bothered me, but some people think Treasury Direct's website is clunky and unreliable.
2. You cannot establish an IRA through Treasury Direct. For that, you have to use a brokerage account like Fidelity, Vanguard, etc.

There seems to be a lot of vitriol over at Bogleheads about TD and their website. People there claim to have has massive errors, lock outs etc. I have to say I have not experienced any issues. Guess I just have to get over having a large sum of money at something other than a traditional bank or brokerage account.
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ochotona
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Re: Treasury Direct for large sums

Post by ochotona » Thu Mar 15, 2018 7:07 pm

Jeffreyalan wrote:Hello all,

I have an inheritance coming and I would like to keep it as safe as possible. So I am thinking of buying Treasury bills with it. Perhaps rolling 1-2 year ones. Does everyone here feel comfortable placing a decent amount of funds in Treasury Direct? I have no reason to not feel safe with them other than the psychological fact that they do not provide statements or have any phone app etc.

Thank you all for your opinions in advance!
Why not just buy Treasuries through a large discount brokerage? It mightn't be as cheap-cheap as TreasuryDirect, but the customer service would be better. I own Treasury bills and bonds through my broker, and Series I Savings Bonds at TreasuryDirect.
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Re: Treasury Direct for large sums

Post by pugchief » Thu Mar 15, 2018 8:22 pm

ochotona wrote:
Jeffreyalan wrote:Hello all,

I have an inheritance coming and I would like to keep it as safe as possible. So I am thinking of buying Treasury bills with it. Perhaps rolling 1-2 year ones. Does everyone here feel comfortable placing a decent amount of funds in Treasury Direct? I have no reason to not feel safe with them other than the psychological fact that they do not provide statements or have any phone app etc.

Thank you all for your opinions in advance!
Why not just buy Treasuries through a large discount brokerage? It mightn't be as cheap-cheap as TreasuryDirect, but the customer service would be better. I own Treasury bills and bonds through my broker, and Series I Savings Bonds at TreasuryDirect.
I thought Fidelity did not charge any markup on Treasuries?
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sophie
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Re: Treasury Direct for large sums

Post by sophie » Fri Mar 16, 2018 8:35 am

No markup on new issue Treasuries at Fidelity. I get T bills there and set for autorollover. Also I get to play my tax trick (buying high coupon treasuries close to maturity to get the same yield plus a little extra from the state from the manufactured loss).

After reading some threads on TD at Bogleheads, I've been hesitant to put anything other than savings bonds in there. The problem is that the website is not the world's safest, especially as you can now add new linked bank accounts without the need for a medallion stamp. Even more worrying, they will not make you whole if the website or your account is hacked. Some Bogleheads members sent queries to TD but got irrelevant or no replies.

There is no serial number on the electronic savings bonds, so I can't keep a separate record as backup other than screenshots. I got an email notification when I scheduled my last savings bond purchase, but I got no notification when I added a new linked bank account.
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jhogue
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Re: Treasury Direct for large sums

Post by jhogue » Fri Mar 16, 2018 10:58 am

After reading it over, I share Sophie’s dissatisfaction with Treasury Direct’s ambiguous responses to legitimate questions expressed about TD’s liability in cases of computer hacking or identity theft of electronic Treasury securities in the thread over on BH. I wish TD would stop prevaricating, both because I believe Congress will force them to accept unambiguous liability in the end, and also because they are only damaging the reputation of the program in the meantime.

I only own electronic savings bonds in my TD account, not Treasurys. I personally own paper I bonds kept in a local bank safe deposit box. They have all been redeemed now, but I have also owned paper EE bonds for more than 30 years—which, by the way, is longer than I have had a brokerage account with Fidelity that currently holds my STTs and LTTs. The guarantee to owners of paper savings bonds is and always has been unambiguous. If it was possible today, I would only own paper savings bonds with registered serial numbers.

To be sure, holding Treasurys in a brokerage account comes with its own risks that HBPP investors need to consider. So far as I know, Fidelity and Vanguard have not suffered from a major computer hacking incident—not yet anyway. Note too that brokerages losses due to theft or fraud are limited by SIPC to $500,000. I personally don’t think this is adequate coverage for many individual investors, especially when white collar pirates like Jon Corzine of MF Global infamy are still prowling the Spanish Main. Yet more reasons for the HBPP investor to practice institutional diversification.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Treasury Direct for large sums

Post by pugchief » Fri Mar 16, 2018 1:22 pm

jhogue wrote: To be sure, holding Treasurys in a brokerage account comes with its own risks that HBPP investors need to consider. So far as I know, Fidelity and Vanguard have not suffered from a major computer hacking incident—not yet anyway. Note too that brokerages losses due to theft or fraud are limited by SIPC to $500,000.
Most major brokerages also buy Lloyd's of London or similar coverage to extend beyond the SIPC amount to $5M total. I guess if you have more than $5M, you shouldn't keep it all in one brokerage. O0
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ochotona
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Re: Treasury Direct for large sums

Post by ochotona » Fri Mar 16, 2018 2:49 pm

sophie wrote:No markup on new issue Treasuries at Fidelity. I get T bills there and set for autorollover. Also I get to play my tax trick (buying high coupon treasuries close to maturity to get the same yield plus a little extra from the state from the manufactured loss).

After reading some threads on TD at Bogleheads, I've been hesitant to put anything other than savings bonds in there. The problem is that the website is not the world's safest, especially as you can now add new linked bank accounts without the need for a medallion stamp. Even more worrying, they will not make you whole if the website or your account is hacked. Some Bogleheads members sent queries to TD but got irrelevant or no replies.

There is no serial number on the electronic savings bonds, so I can't keep a separate record as backup other than screenshots. I got an email notification when I scheduled my last savings bond purchase, but I got no notification when I added a new linked bank account.
If TD gets hacked, somehow in my heart of hearts I believe they will make me whole on my I-bonds if I send in good documentation of all purchases. Or am I being a fool?
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sophie
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Re: Treasury Direct for large sums

Post by sophie » Fri Mar 16, 2018 10:11 pm

I'm not sure how safe a bet that is. If large institutions keep money there and are affected by the break-in, I imagine yes. If it's just your account that got hacked and you're a small fry with just some savings bonds, then...who knows.

I've wondered the same about the Perth Mint, another government institution that I'm investing with directly. They also don't promise to make you whole if they get hacked, but they do have a century-old stellar reputation for international investing to maintain. And, they make it nearly impossible to change your linked bank account, so I imagine that process would be difficult to hack. Neither of these is true of Treasury Direct.

I still went ahead and bought my I bonds in December, but I definitely thought twice after reading that Bogleheads thread.
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Re: Treasury Direct for large sums

Post by dualstow » Sun Mar 18, 2018 2:22 pm

sophie wrote:There is no serial number on the electronic savings bonds,
That's a good point. I never really thought about it. I haven't bought anything through them for a long while now. I'm just unloading paper bonds that have matured. At my bank.
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