Hey everybody welcome back to wayport Finance my name is Marco and I'm here to Help you master your money and build Your wealth in today's video I'm going To disclose that I bought fifty thousand Dollars of a specific asset and I want To take you through the steps and also My thought process of why I did that uh So let's get right into it so spoiler Spoiler alert I just bought fifty Thousand dollars worth of T bills and I'll give you five reasons why so I know This isn't the most exciting thing in The world uh but I promise you uh for a Lot of you it may actually behoove you To do this so this is a screenshot from My Twitter uh saying that I bought fifty Thousand dollars worth of t-bills as you Can see down here this was purchased on January 18 2023. uh so you can see right Here uh purchase was requested I believe It went through yesterday Um for fifty thousand dollars uh source Of funds et cetera et cetera so why did I do this but before we get into that You need to understand the three types Of Treasury Securities to begin with uh So you have what we call T bills which Have a duration of one year or less or Maturity of one year or less you have Notes which can last two three five Seven and ten years and then you also Have treasury bonds treasury bonds are Typically 20 years or more specifically
20 or 30. so here's the first reason why I bought fifty thousand dollars worth of T bills so number one is that right now They have a high historic yield okay so Right here is just a at the time of this Recording this is a screenshot of all The us treasuries and what they're Yielding so on the left hand side you Have the maturity date so you can have One month all the way to 30 years if That makes sense and then over here you Can see basically the yield that this Asset is throwing off and these are all Done over a period of one year so that Way you know you're comparing Apples to Apples so you're gonna get if you choose To buy a us one year T Bill and you hold It to maturity you're going to be Earning 4.686 percent on this investment Now if you hold say for example a Three-month Bill to maturity you're only Going to be getting 25 percent of this Because remember there's 12 months in a Year you're only holding it for three Okay three six nine twelve twenty five Percent so you can see here that um the Number one reason why I'm investing Right now is because there's an inverted Yield curve which I'll show you in the Next slide but you can see these longer Durations are typically supposed to Yield more than the lower durations Because you're holding it for a longer Period of time however you can see here
That it's almost flipped you can see That all of the one month three months Four months six month one year these are All yielding in the mid fours and you Can see all the ones that are basically Three years to 30 years they're all Yielding in the mid to high threes okay So that's a big reason for that so let's Take a look at this yield curve and what This means so when short end yields rise Above longer ones like we saw in the Previous slide that is historically Represented expectations for the FED to Raise the Benchmark rate okay to raise Interest rates enough to drag the Economy enemy into a recession so if you Look at these gray bars right here you Can see whenever these numbers Spike up We're basically headed into recession Territory because you can see they dip Right here enter a recession they dip Right here we enter a recession they dip Right here we enter a recession so we're Sitting right here at basically one of The longest or one of the biggest Discrepancies in yield curve in the last You know 30 or 40 years you can see the Difference is basically at negative 1.3 Or so and this is basically taking the 10-year treasure yield minus the three Month treasury yield and you can see the Difference here so what this means is is That if we enter a recession and all Your stocks get crushed I know that I
Will be doing number two getting Risk-free income okay so number one is That this is completely risk-free also Known in finance circles as the Risk-free rate so basically the Risk-free rate is a rate of return that Is the interest rate an investor can Expect to earn on an investment that Carries zero risk why is that well let's Look at number two because it's backed By the government okay so this isn't Backed by you know Lebanese currency Argentinian currency that's inflating a Hundred percent this year uh Turkish Currency that's almost at 100 inflation This year the Lira this is backed by the U.S dollar okay this is backed by oil Military Et cetera et cetera so unlike corporate Bonds they're only as strong as the Company issuing them so the government Is going to be perceived more strong Than you know a random company issuing Bonds uh so much so that I decided to Put this snippet in the video you can See here from I believe CNBC is that U.S Companies face record at 10.5 trillion In debt and this is what we talk about The corporate bond bubble I've been Talking about this on my channel for a Year or two now and then finally they Pay better than CDs and they're more Flexible than CDs CDs are just Certificates of deposit so let's talk
About some of the tax benefits of these T-bills and why I decided to buy them so Interest earned on all U.S treasury Securities including t-bills is exempt From taxation at the state and local Level but it's fully taxable at the Federal level so I I I live in a suburb Of Cleveland I'm in Ohio so we have State income tax we have a lot of taxes Here in Cuyahoga County it's crazy but At least with this you know that um it's Exempt from taxation at the state and Local level but you still will have to Get a 1099 int at the end of the year And that will be represented on your Federal taxes or what you owe so if you Live in a state with high local taxes T Bills might be more advantageous than Other short-term fixed instruments and That is why I decided to invest in T-bills but before we get into the next Section of number four I want to give a Shout out to today's sponsor which is Masterworks this is a completely Different asset class which I'll Describe to you right now this difficult Year is not over the debt ceiling Standoff is still looming you're here to Try and protect your gains but are you Diversified enough to weather the storm A Barkley study from the last year found That the markets haven't been in sync Like this in over 15 years that means It's more important than ever to open
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Get into number four T bills or any Treasuries they're very easy to buy okay So if you go to my video I post this About three four months ago it's Basically a full tutorial on how to buy This either on Treasury direct or Through Charles Schwab okay so this will This will walk you through everything Completely but let me show you that Process right now just in a quick Nutshell so you can get an idea of what It looks like okay so this is me and my Treasury direct account okay so you can See here that I purchased I bonds I Bought 10 grand on January 3rd I bought 10 grand on July 13th but then down here You can see on the 24th or it's going to Actually complete on the 24th my fifty Thousand dollar purchase of T bills okay So if you're wondering what duration I Bought I bought the eight week duration This should land somewhere are in the I Think 4.6 or 4.7 percent return but Remember you're you're only getting a Proportion of that annual yield based on The duration that you hold it so if it's A one year and it's earning 4.7 at the End of one year 52 weeks you're going to Earn 4.7 if it's eight weeks you're only Going to earn that proportion of a year Um based on eight weeks okay so how do You buy these things just very very Quickly because I don't want to turn This into into a tutorial all you have
To do is go to treasury Direct And click on buy direct so when you Click on buy direct you're then taken to This screen I just zoomed in and got rid Of my account number so I don't have to Keep blocking it but basically you would Click on bills and then you'd go down Here and click submit once you click Submit you are then taken to this page Where you can then see the auction date And the issue date the auction date is When the rate is established the issue Date is when you actually get those Securities so you have anywhere from Four week eight week 13 weeks 17 week 26 Week 52 week and there you go okay so That's how you buy treasury bills very Quickly through treasury direct you can Also do this through Schwab you can also Do this through your broker all you have To do is watch this video that's on the Screen right now okay so the fifth and Final reason why I bought 50 Grand worth Of T bills is because they have a better Yield than a savings account so remember The T bills that I bought are probably Going to end up somewhere in the Neighborhood of 4.6 to 4.7 percent apy But what you'll see here is this is a Screenshot of my Capital One 360 Performance savings account you can see That I'm earning 3.3 percent so I'm Earning about a 140 basis points more or 1.4 percent more uh with the T bills
That I am with a savings account so I Just wanted to end this with my thoughts So let's get into it so t-bills they're A great way to get into an asset Risk-free especially if you're sitting On a bunch of cash right now so if you Have a bunch of cash you don't really Trust the market you don't want to stuff It into you know crypto gold you know Whatever you may be investing in Um and you don't want to and you want to Have a store of value or preservation of Value while not getting destroyed by Inflation uh that's the other thing I'm Going to talk about you're still losing Money to inflation uh by buying these Things so even if you're getting you Know four or five percent inflation is Still sitting at six or seven percent The last time I checked so Savers are Still losers however your your narrowing That discrepancy between your high yield Savings account which may be 3.3 to Let's say four four percent maybe right Now at the time of this recording versus Inflation which is 6 7. so at least You're getting a little bit closer to That inflation number which is why I buy I bonds anyway which I'll talk about in A different video but with these bonds Is are these bills excuse me is that It's a risk-free rate so there's Literally no risk unless the government Were to default tomorrow or within the
Duration of that bill you know Max of 52 Weeks if it's a t-bill so it's a Risk-free rate it's a lot of tax Advantages which we talked about in the Video and then also it's just a good way To squirrel away some money if you know You're a spender okay so if you have all This money sitting in your savings Account and you're like oh you know I'm Gonna buy the next shiny thing just Because I have my money sitting there You know this could be a good way to Lock it up for you know a couple months You know a couple weeks couple whatever Okay anywhere from four weeks to 52 Weeks so you're not going to get rich Off this but at the same time it's a Good tool to have in your toolbox and Again you're getting about almost one And a half percent more than you would In your traditional savings account so Hopefully this was helpful to you um I Stocked away 50 grand for eight weeks You know it's no big deal this was part Of my War chest anyway it's money just Sitting in that Capital uh Capital One 360 savings account anyway so hopefully You got value from this go check out my Other video if you don't know how to buy These things and thank you for sitting Through today's sponsor I appreciate it And as always have a prosperous day okay Let's hear it you can make fun of me I Bought t-bills come on Marco my grandma
Bought two bills my Grandpa bought tea Bills I get it I'm all ears I could take it uh All joking aside I'm parking this just For a couple months uh just to Reevaluate I'm still dollar cost Averaging I'm still saving up a little Bit for a little real estate fund I got Going on the side Um this is probably going to be part of That so it's just we're just chilling Guys it's a two month t-bill relax no Need to no need to destroy me in the Comments my grandma bought two builds Yeah well your grandma's awesome okay Thank you
