Mar 23, 2023
Hello, and welcome back to Powering Your Retirement Radio. In today’s episode, I want to discuss the most often question I get these days: "Should I buy Treasury Bills?” I also want to discuss what happened with Silicon Valley Bank (SVB).
It seems like several times each week. Someone calls to ask what I
think about buying Treasury Bills. I first want to know why they
want to buy them. Is it because they have extra money languishing
in the bank, or do they want to move money from their current
investments to something guaranteed?
Either way, you can make a case for it, but you need to determine
if it is shifting money that is already invested. What will cause
you to change your investments in the future? If it is cash in the
bank, then it is a little less complicated. With rising interest
rates, you should plan to buy bonds that you plan to hold to
maturity, in my opinion. You can trade them, but that changes the
simplicity of buying a 3- or 6-month Treasury Bill that will mature
at par.
I will tie in with why this is what happened that caused the
failure of SVB. Being forced to sell longer-dated Treasury
Securities that were in a paper loss position because of interest
rate increases. If they didn’t face a run on the bank and could
have held to maturity, they would have gotten all their money back.
Unfortunately for SVB, they were forced to realize the loss and
caused the second-biggest bank failure in US History.
Have a listen for the complete story.
For more information, visit the podcasts website: https://poweringyourretirement.com/2023/03/24/treasury-bills