Author Topic: Buying individual short term US treasury  (Read 406 times)

BobTheBuilder

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Buying individual short term US treasury
« on: July 10, 2019, 04:21:14 AM »
Dear all,

I am having a hard time deciding how to park 5,000 to 6,000 USD for half a year in something that gives off a bit of interest.

Short term US government bonds have, unlike German government bonds, a positive yield.
While I am fine with a bit of risk wrt to currency (I am in the Eurozone), I would not like to speculate on interest rate developments and therefore, matching the time frame of the financial need, buy only into bonds with significantly less than 3 years to maturity.

Unfortunately, I cannot buy into VGSH, because they do not disclose some kind of information the regulators apparently insist on, and I have not found a good alternative available through my German brokers (ING and Comdirect)

However I could buy a 2 year US Treasury 2020 with 2.5% coupon maturing in June 2020 for reasonable trading costs of 2.9.
The bond ETF would automatically re-invest, which I would not have a definitive need for. Apart from the fixed maturity, there is nothing wrong with buying this one security over a short term treasury fund, right?

beltim

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Re: Buying individual short term US treasury
« Reply #1 on: July 10, 2019, 05:29:59 AM »
No, there's nothing wrong with this approach.  The main reason usually given for using a bond ETF instead of individual bonds for short term cash like this is default risk, but that's not a risk with US treasuries.  The other problem could be exchange rates, but if you're okay with the risk of currency movements, then there's nothing wrong with this approach.

BobTheBuilder

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Re: Buying individual short term US treasury
« Reply #2 on: July 10, 2019, 02:07:50 PM »
Thanks for the advice beltim, much appreciated!

chasesfish

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Re: Buying individual short term US treasury
« Reply #3 on: July 10, 2019, 04:49:38 PM »
I'll second that, nothing wrong with that approach.

I've seen lots of wealthier friends also betting that the US will eventually have german style interest rates and snatching up as many 10 and 30 year treasuries as they can