the first one on the list has coupon payments of3.75%. However its current yield is some .01%.
So, for a 100EUR bond face value you will have to pay some 101.30EUR these days to buy it. You will get 3.75% per annum coupon payment at coupon payment date (prorated for the number of days you hold it) and you will receive 100EUR at maturity. This equals to an equivalent of 0.01% yield.
As you see, the issue date and coupon has no relevance, except for taxes. Interest payment has usually a different treatment than capital gain.
Take note: You practically have a negative return if you factor transaction costs and taxes (if taxable account).
Personally, for these reasons, I didnt renew my ladder for EU PP recently. I keep cash in savings account (1%).
CA PP,
can I know which assets (etfs...) composes your EU-PP ?
Arturo lives in Spain which is not a very good country to keep CD - Cash deposits for the 25% savings. What do you suggest?
the first one on the list has coupon payments of3.75%. However its current yield is some .01%.
So, for a 100EUR bond face value you will have to pay some 101.30EUR these days to buy it. You will get 3.75% per annum coupon payment at coupon payment date (prorated for the number of days you hold it) and you will receive 100EUR at maturity. This equals to an equivalent of 0.01% yield.
As you see, the issue date and coupon has no relevance, except for taxes. Interest payment has usually a different treatment than capital gain.
Take note: You practically have a negative return if you factor transaction costs and taxes (if taxable account).
Personally, for these reasons, I didnt renew my ladder for EU PP recently. I keep cash in savings account (1%).
CA PP,
can I know which assets (etfs...) composes your EU-PP ?
Arturo lives in Spain which is not a very good country to keep CD - Cash deposits for the 25% savings. What do you suggest?
Thank you.
Frugal please, i would appreciate if you could stop asking for subjects that are not the core of my thread. thank you very much in advance.
Why isn't BIL in this list? It is a pure T-Bill 1-3 month fund. Can't say the same for the above.
I don't believe in the security theatre of using ETFs but if I was, I would just buy PERM. It's all the same B.S. at the end of the day. Though I wonder about the actual net expense ratio of a fund of funds.
The ones listed are the iShares (Black Rock) "treasury" ETFs. BIL is a SPDR (State Street) ETF, very similar to SHV. From their most recent semi annual statement, the SPDR ETFs can also loan out up to 1/3 of their assets and invest the collateral in State Street MMs. I didn't follow this through to the point of figuring out what the State Street MM can do with the money, but it looks like a very similar set up (we promise we'll put your money in nice safe treasuries, but then we'll loan these out for "cash" and invest the cash in non-treasury backed MMs!!??). The amount of BIL that is currently loaned out is less than 1%.
BearBones wrote:
If there is little or no advantage to the primary auction, why not just buy on the secondary? I'd say, unless you are going for institutional diversification by going to Treasury Direct, forget about the primary auctions.
Some people just like that "new bond smell" from brand new bonds bought at auction
In a recent Boglehead forum which was actually supposed to be about gold and silver as a currency hedge, Bill Bernstein posted that "nothing is free except directly or flagship bought treasuries at auction." I wonder why he specified "at auction." http://www.bogleheads.org/forum/viewtop ... 0#p2254219
Last edited by dualstow on Fri Nov 14, 2014 5:29 am, edited 1 time in total.
Monstres and tokeninges gert he be-kend, / And wondirs in the air send.
dualstow wrote:
In a recent Boglehead forum which was actually supposed to be about gold and silver as a currency hedge, Bill Bernstein posted that "nothing is free except directly or flagship bought treasuries at auction." I wonder why he specified "at auction." http://www.bogleheads.org/forum/viewtop ... 0#p2254219
I'm pretty sure the Primary Dealers mark them up before they are at auction.
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes
Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet. I should not be considered as legally permitted to render such advice!
dualstow wrote:
In a recent Boglehead forum which was actually supposed to be about gold and silver as a currency hedge, Bill Bernstein posted that "nothing is free except directly or flagship bought treasuries at auction." I wonder why he specified "at auction." http://www.bogleheads.org/forum/viewtop ... 0#p2254219
I'm pretty sure the Primary Dealers mark them up before they are at auction.
I think he was saying there's no spread. But I'm guessing the market bids the price up to account for this "no spread" feature!
