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1hotjava t1_ja2zrfr wrote

You didn’t pay $5k. You bought it at a discount. T-bills are “zero coupon” meaning they don’t pay an interest payment, instead you buy them for less than face value and get paid face value. The difference between the two numbers equates to the yield you should get.

Edit : so I have a 4mo, it’s face is $20k. I paid $19,694. The price was $98.4712 so the effective yield is 4.76%.

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mypantsrblue t1_ja6rim1 wrote

You tie up 20K to make $300? Is that a thing that people do that’s advisable?

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TH_Rocks t1_ja7ecb5 wrote

It's a guaranteed return with no additional effort or gambling on price fluctuations. Yes, people do that.

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1hotjava t1_ja7h6az wrote

If you had $20k in a savings account making 4.76% after 4 months it would be the same thing.

T-Bills are a solid asset for part of your bond allocation in your overall portfolio. Guaranteed to make the rate that you bought them at

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