Fidelity Bond and Bill Direct Purchase ?'s

Discussion of the Bond portion of the Permanent Portfolio

Moderator: Global Moderator

pmward
Executive Member
Executive Member
Posts: 243
Joined: Thu Jan 24, 2019 4:39 pm

Fidelity Bond and Bill Direct Purchase ?'s

Post by pmward » Tue Feb 05, 2019 12:13 pm

Hey guys, I'm in the process of setting up my GB over the next week. I was perusing Fidelity's site for direct bond purchases and I came up with a couple questions that I couldn't find the answer to on the site:

1) I see there is a 30 year bond offering with a settlement date on the 15th. Expected yield is decently higher than TLT. So I'm thinking of doing my big rebalance and putting my full initial LTT allocation in this. One question I have is once I purchase the bonds, does the account screen reflect the day to day price fluctuations like they do a stock? Or do I have to manually look up the sale price and calculate?

2) I see Fidelity has an auto-renew feature now. Has anyone ever set up a ladder of T-Bills for the cash portion? Currently I'm using SHV as my money market account, but yields on the T-Bills are much better when there's no ER involved. Is it really as hassle free to auto-renew T-Bills as it appears? Also, what happens if I have an emergency and need to sell, are selling T-Bills as liquid as selling an ETF?

I like the idea of having the bonds in my own possession as opposed to in a fund. It also eliminates a lot of fees. Just curious if there is any hassle involved, or if this is as good as it appears on first glance?
flyingpylon
Executive Member
Executive Member
Posts: 391
Joined: Fri Jan 06, 2012 9:04 am

Re: Fidelity Bond and Bill Direct Purchase ?'s

Post by flyingpylon » Tue Feb 05, 2019 12:50 pm

Based on my experience, it's as good as it sounds.

1 - Prices do reflect fluctuations.

2 - Auto-renew is easy and hassle-free (though it's been a couple years since I was doing this). I recently sold some T-bills at Fidelity. It took one day for the transaction to settle and one more day to EFT to my checking account at another bank. Of course your mileage may vary and I would build at least a few extra days into the plan if possible.
pmward
Executive Member
Executive Member
Posts: 243
Joined: Thu Jan 24, 2019 4:39 pm

Re: Fidelity Bond and Bill Direct Purchase ?'s

Post by pmward » Tue Feb 05, 2019 1:03 pm

Excellent! Well that seems like a pretty good deal then, and not anymore hassle than an ETF. I just wanted to make sure that this was as good as it sounds, and that there isn't any hidden gotchas. I think I'm gonna give it a go! It's kind of fun trying out new things like this. I've never actually purchased a bond directly before.
anato
Junior Member
Junior Member
Posts: 2
Joined: Wed Feb 15, 2017 11:25 pm

Re: Fidelity Bond and Bill Direct Purchase ?'s

Post by anato » Tue Feb 05, 2019 3:38 pm

Only issue I found with the auto-roll is that there's no way on the website to turn it off if you change your mind and you don't want them to buy it again when it matures. But this is realistically an issue only for STT, not LTT, since after a 30y bond has 20y left, you're supposed to sell it and buy another 30y.

For 30y, I personally prefer to spread my contributions in no more than 2-3k$ each when they go on action, so I feel I have more flexibility when it comes to tax loss harvesting. I guess it's purely psychological... since I think you could sell any an integral portion of each bond holding (i.e. if you bought 15, you can sell 3 and keep 12)
Pet Hog
Senior Member
Senior Member
Posts: 139
Joined: Tue May 28, 2013 4:08 pm

Re: Fidelity Bond and Bill Direct Purchase ?'s

Post by Pet Hog » Tue Feb 05, 2019 4:12 pm

Regarding question 1, the bond price on Fidelity is updated just once per day, at around 8 pm eastern. You don't get the real-time prices during the day as you do for stocks.

As anato noted, the auto-roll feature can't be turned off on the website, but you can make a call and they'll do it for you. It's very easy -- I did it about three months ago.

Buying bonds direct is, to me, quite thrilling. It does seem to give extra peace of mind, cutting out one middleman, and it feels like you're playing with the grownups! Just make sure you express your interest in the auction before the 15th so you don't miss it.
pmward
Executive Member
Executive Member
Posts: 243
Joined: Thu Jan 24, 2019 4:39 pm

Re: Fidelity Bond and Bill Direct Purchase ?'s

Post by pmward » Tue Feb 05, 2019 4:36 pm

Pet Hog wrote:
Tue Feb 05, 2019 4:12 pm
Regarding question 1, the bond price on Fidelity is updated just once per day, at around 8 pm eastern. You don't get the real-time prices during the day as you do for stocks.

As anato noted, the auto-roll feature can't be turned off on the website, but you can make a call and they'll do it for you. It's very easy -- I did it about three months ago.

Buying bonds direct is, to me, quite thrilling. It does seem to give extra peace of mind, cutting out one middleman, and it feels like you're playing with the grownups! Just make sure you express your interest in the auction before the 15th so you don't miss it.
Yeah, it's quite a bit of savings for not much extra hassle. And it places the bond in my control, not in the control of a fund. Thanks for the heads up about having to call to turn auto-roll off. Hopefully I'll never have to do that.

I actually just placed the sell order on the fund I'm going to transfer to LTT's today. So I'll be submitting the order for the 30 year treasury auction tomorrow morning when I have access to the funds. I also sold a chunk of my SHV and submitted an order for some T-Bills today. If all goes as well as I think it will then I'll swap the rest of my SHV out for T-Bills laddered out over the coming weeks. So far this is a lot easier than I thought it would be. I'm glad I started to actually look into this as opposed to just sticking with all ETF's.
Last edited by pmward on Tue Feb 05, 2019 4:47 pm, edited 2 times in total.
pmward
Executive Member
Executive Member
Posts: 243
Joined: Thu Jan 24, 2019 4:39 pm

Re: Fidelity Bond and Bill Direct Purchase ?'s

Post by pmward » Tue Feb 05, 2019 4:43 pm

anato wrote:
Tue Feb 05, 2019 3:38 pm
For 30y, I personally prefer to spread my contributions in no more than 2-3k$ each when they go on action, so I feel I have more flexibility when it comes to tax loss harvesting. I guess it's purely psychological... since I think you could sell any an integral portion of each bond holding (i.e. if you bought 15, you can sell 3 and keep 12)
I'm doing this initial one as a large chunk in my IRA (so no worries on taxes), but I'll still be adding contributions every 2 weeks to my taxable accounts when I get paid. So from here on out I'll likely I'll wind up doing the same as you, I'll just hold it as cash in my sweep account and every time they have a new auction I'll purchase a couple grand to rebalance my LTT's with everything else.
Pet Hog
Senior Member
Senior Member
Posts: 139
Joined: Tue May 28, 2013 4:08 pm

Re: Fidelity Bond and Bill Direct Purchase ?'s

Post by Pet Hog » Tue Feb 05, 2019 5:03 pm

pmward wrote:
Tue Feb 05, 2019 4:36 pm
Pet Hog wrote:
Tue Feb 05, 2019 4:12 pm
Just make sure you express your interest in the auction before the 15th so you don't miss it.
So I'll be submitting the order for the 30 year treasury auction tomorrow morning when I have access to the funds.
Sorry, I made a mistake. The auction in on Thursday the 7th -- so, yes, put your order in tomorrow!
User avatar
ochotona
Executive Member
Executive Member
Posts: 2426
Joined: Fri Jan 30, 2015 5:54 am

Re: Fidelity Bond and Bill Direct Purchase ?'s

Post by ochotona » Tue Feb 05, 2019 10:03 pm

Pet Hog wrote:
Tue Feb 05, 2019 4:12 pm
Buying bonds direct is, to me, quite thrilling. It does seem to give extra peace of mind, cutting out one middleman, and it feels like you're playing with the grownups! Just make sure you express your interest in the auction before the 15th so you don't miss it.
I love Fidelity auto-roll on T-Bills. I am a traitor to Schwab. I pretty much fired Marcus (Goldman Sachs Bank) after the folks here tipped me off.
User avatar
pugchief
Executive Member
Executive Member
Posts: 2643
Joined: Tue Jun 26, 2012 2:41 pm
Location: suburbs of Chicago, IL

Re: Fidelity Bond and Bill Direct Purchase ?'s

Post by pugchief » Wed Feb 06, 2019 7:30 pm

ochotona wrote:
Tue Feb 05, 2019 10:03 pm
Pet Hog wrote:
Tue Feb 05, 2019 4:12 pm
Buying bonds direct is, to me, quite thrilling. It does seem to give extra peace of mind, cutting out one middleman, and it feels like you're playing with the grownups! Just make sure you express your interest in the auction before the 15th so you don't miss it.
I love Fidelity auto-roll on T-Bills. I am a traitor to Schwab. I pretty much fired Marcus (Goldman Sachs Bank) after the folks here tipped me off.
Could you elaborate?
User avatar
ochotona
Executive Member
Executive Member
Posts: 2426
Joined: Fri Jan 30, 2015 5:54 am

Re: Fidelity Bond and Bill Direct Purchase ?'s

Post by ochotona » Wed Feb 06, 2019 8:23 pm

90 day T Bills pay more than Marcus
pmward
Executive Member
Executive Member
Posts: 243
Joined: Thu Jan 24, 2019 4:39 pm

Re: Fidelity Bond and Bill Direct Purchase ?'s

Post by pmward » Wed Mar 06, 2019 9:41 pm

anato wrote:
Tue Feb 05, 2019 3:38 pm
Only issue I found with the auto-roll is that there's no way on the website to turn it off if you change your mind and you don't want them to buy it again when it matures.
I made a purchase of 4 week T-Bills 4 weeks ago with auto-roll to test it out. I figured out how to cancel auto-roll on the website. A couple days before the auto-roll happens they show up as a pending order in the "Orders" tab on the account. It has a cancel button, and if you cancel the order it cancels the auto-roll. I have not found a way to cancel it earlier than that, other than selling them of course. But if you're as anti-social as me, at least there is a way to do it on the website without having to call and talk to someone, haha.
Post Reply