So .. a little move for the GTC Sample Portfolio that will mimic something that we ourselves have been doing in our own portfolios?
Taking the ‘risk-free’ trade each month, for nearly a free 40 Basis Points. Buying 30 Day Treasury Bills … the cash Bill … for the Yield and holding it to term.
Generally, this involves a call to your Trade Desk, letting them know you want the 30 Day Bill, and they can quote you the price, and obtain the Treasury Bill for you (They may have other specifics like the minimum needed for purchase, margin rate, commissions for calling the Trade Desk, etc). Since it is a Bill issued by the United States; and thus considered risk-free? The margin requirement for even $50,000 worth, is next to nothing. Maybe as high as four percent (4%) in some cases. Regardless, the impact to your purchasing power should be negligible.
For folks that are new? Remember … simply because you can see 30 Day Bills at something like 5.44%? That’s annualized. The Discount to Yield is usually something like 5.23%, and that gives you approximately 40 Basis Points of Return in 30 days. And currently, that annualizes out to around 5.44%
So, that is what we are doing for the GTC Sample Portfolio.
We will the call being made to the Trade Desk and consider $55,000 worth of U.S. 30 Day Treasury Bills bought as of yesterday, maturing at the end of November.
It’s a free trade, with ridiculously low margin that barely affects our buying power? It only makes sense to make the trade.
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