Friday, March 15, 2024

Short Term T-Bills As a Good Investment

Wolfstreet confirms my investment strategy for the last six months of parking lots of cash into short term treasuries (T-Bills), or money markets that hold them and pay about the same.

I never bought into inflation coming down (I can see it with my own eyes), nor the Fed lowering interest rates multiple times this year (not for economic reasons anyway, politically they will be pressured to do one in an election year).  So I have lots of money in a ladder at 5.1-5.3% where one matures every month, which I just put it back into another T-Bill earning 5.1% or better.  Note I am in a high tax state so it would take a CD earning 5.5% or better to match a T-Bill.

The risk here is if I get caught with lowering interest rates then end up having to re-invest at a lower rate than if I had locked in a longer duration.  I am betting my own money that inflation isn't going anywhere and rates are not coming down.

My run-on sentence comment there:

I’ve been keeping a large pile in short terms and money markets that buy them since I never bought into the rate cut mania. I’ll make 5+ risk free all this year, just a question on when I lengthen duration, but won’t buy anything less than 5%, which I expect to happen further out the yield curve since inflation isn’t cooling and government spending keeps going through the roof.

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