Tbill Reinvestments in IRA

[TPSInvest]

I am looking to open a brokerage account for my IRA. My goal is to purchase US gov't Tbills and have them automatically reinvest, just like they do at Treasury Direct. (I'm not sure why TD doesn't permit IRA accounts). I like Vanguard, but I have heard that Fidelity and Schwab offer autoroll. Does Vanguard offer autoroll? I would appreciate some opinions, comments or recommendations.

[Rocky Mtn Man]

I have both Fidelity and Vanguard. Fidelity autorolls T-Bills, Vanguard does not. Fidelity has a better user interface on their website, IMHO.

Most forum members have experienced better customer service at Fidelity.

[MrJedi]

I don't believe Vanguard offers autoroll.

However I don't really see the appeal of autoroll when you can just buy a fund that autorolls and manages duration, etc. for you with greater efficiency. I personally would only buy individual treasuries when not rolling a ladder to match up with with spending the money.

[TPSInvest]

6 month tbill currently pays 4.9%, very little risk. The mm funds about 4.1%. The short term Treasury etf and mutuals have interest rate risk. Too bad Vanguard does not catch up and offer autoroll.

[MrJedi]

Anything with non zero duration has interest rate risk, including individual treasuries.

[AnonJohn]

I'm not sure that when my 6 month t-bill expires in 6 months that 6 month t-bills will still be my best fixed income option. Do you want auto-roll to maximize returns or for convenience?

If convenience, I'd echo what has been said. Just buy a mutual fund. VUSXX gets you 4.4%. [Aside: Does anyone know a Vanguard fund that just invests in t-bills? VUSXX is good but is 31 day duration, so is leaving something on the table]

I acknowledge that auto-roll fills a gap. It can be more optimized and less convenient than a mutual fund but less optimized and more convenient than doing things by hand. You may want to live in that space ... but it's a smallish space. <= .5%? (and I'd emphasize the "less than")

On Vanguard vs Fidelity ... I get why people like Fidelity amenities. I've advised my parents to go with Fidelity. But let me share a story. 15 years ago I had accounts at both, a vestige of working different jobs. I was talking with my brother, who uses Fidelity. I was saying how much I wanted to be able to view returns in this way or that. He said "it's easy, Fidelity offers that". I said "no they don't!"

After some drilling and calling we learned that: Fidelity's website let him do those things because he had more money there, over a threshold. But they did not let me do it because my account was too small. Fidelity disabled basic analytic services on their website to smaller. Something that cost them nothing, since they had already built it. I consolidated to Vanguard.

[exodusNH]

I'm not sure that when my 6 month t-bill expires in 6 months that 6 month t-bills will still be my best fixed income option. Do you want auto-roll to maximize returns or for convenience?

If convenience, I'd echo what has been said. Just buy a mutual fund. VUSXX gets you 4.4%. [Aside: Does anyone know a Vanguard fund that just invests in t-bills? VUSXX is good but is 31 day duration, so is leaving something on the table]

I acknowledge that auto-roll fills a gap. It can be more optimized and less convenient than a mutual fund but less optimized and more convenient than doing things by hand. You may want to live in that space ... but it's a smallish space. <= .5%? (and I'd emphasize the "less than")

On Vanguard vs Fidelity ... I get why people like Fidelity amenities. I've advised my parents to go with Fidelity. But let me share a story. 15 years ago I had accounts at both, a vestige of working different jobs. I was talking with my brother, who uses Fidelity. I was saying how much I wanted to be able to view returns in this way or that. He said "it's easy, Fidelity offers that". I said "no they don't!"

After some drilling and calling we learned that: Fidelity's website let him do those things because he had more money there, over a threshold. But they did not let me do it because my account was too small. Fidelity disabled basic analytic services on their website to smaller. Something that cost them nothing, since they had already built it. I consolidated to Vanguard.

Are you specifically looking for a fund that only holds Treasury bills or do you mean Treasuries in general? Vanguard has several of the latter -- VGSH, VGIT, some longer duration ones. There is an ETF from another provider that holds shorter duration ones.

[Kevin M]

People have reported that with Schwab auto roll you are out of Treasuries for a period of time between maturity and the next purchase. At Fidelity, proceeds of the maturing Treasury are used to buy the new Treasury, which I can verify from experience.

[Looking4Answers]

On Vanguard vs Fidelity ... I get why people like Fidelity amenities. I've advised my parents to go with Fidelity. But let me share a story. 15 years ago I had accounts at both, a vestige of working different jobs. I was talking with my brother, who uses Fidelity. I was saying how much I wanted to be able to view returns in this way or that. He said "it's easy, Fidelity offers that". I said "no they don't!"

After some drilling and calling we learned that: Fidelity's website let him do those things because he had more money there, over a threshold. But they did not let me do it because my account was too small. Fidelity disabled basic analytic services on their website to smaller. Something that cost them nothing, since they had already built it. I consolidated to Vanguard.

What is available for individual investors has changed a lot over the years, and what a person may need will change as well. However, your experience reminded me that years ago I opened up my first IRA with Vanguard. When I realized they were charging me $10 yearly for the privilege (because I had a small balance) when others offered free I moved my account (to Scottrade at the time). When a family member lost her husband, who had handled all investments, we looked into managed accounts. At the time Vanguard required a million dollars, Fidelity $300,000.

[AnonJohn]

Are you specifically looking for a fund that only holds Treasury bills or do you mean Treasuries in general? Vanguard has several of the latter -- VGSH, VGIT, some longer duration ones. There is an ETF from another provider that holds shorter duration ones.

I was thinking T-bills only. VGSH is 1-3 years. VUSXX is pretty close, I should just stick with that (and direct purchase). Cheers!

[123]

Fidelity is a better Tbill experience than Schwab. Fidelity does same-day auto rollover on maturing Tbills whereas Schwab waits a week before the reinvestment. Schwab does not do auto rollover on 52 week Tbills whereas Fidelity does. Schwab does a lot of things that tend to reduce your return on "cash". Schwab uses a low-interest bank account as the settlement account whereas Fidelity lets you use a MMF with much higher yields. If your account is 100% invested Schwab is fine but if you keep any cash in it Fidelity is superior.

[Kevin M]

^Schwab usually has better pricing for small quantities. Typically they have the best price/yield for min qty 1, while at Fidelity it's usually min qty 100 or more for best price.

[Kookaburra]

How does Fidelity auto roll work? Does it buy a Treasury of the exact (or closest) duration of the one that just matured, at the highest available YTM for the given quantity?

[Kevin M]

How does Fidelity auto roll work? Does it buy a Treasury of the exact (or closest) duration of the one that just matured, at the highest available YTM for the given quantity?

If you roll a 4-week Treasury, it will roll into the Treasury that is issued on the day your current 4w bill matures. Ditto for other maturities. This only works for Treasuries bought at auction.

[Artsdoctor]

Auto-roll is a very nice feature for many. I've learned on Bogleheads that the auto-roll feature at Fidelity never has you "out of the market" so that when one treasury matures, money is automatically rolled into a corresponding treasury with the same maturity and the same face value. It's all done at auction.

There's a small price to be paid for that depending on what your goals are. First, if you have $100,000 and want to buy T-bills at auction, you'll need to place an auction order to buy 100 (and it would cost you $97,680 as an example). In reality, if you were to purchase 6-month T-bills on the secondary market (for example, now yielding perhaps 5%), you could place an order to buy 102 since you'd be buying it at 97.68 and it would cost you $99,634 (nearly all of that $100,000 you have). At the end of 6-months, your auto-roll would again put you in a 6-month T-bill and again with $100,000. However, if you had your 102 T-bills maturing which you purchased on the secondary market earlier, and the yield were the same, you'd be placing another order on the secondary market for 104. So it all depends on if you want to continue investing everything or you're happy to have the interest spun off for some other reasons.

[Doc]

People have reported that with Schwab auto roll you are out of Treasuries for a period of time between maturity and the next purchase. At Fidelity, proceeds of the maturing Treasury are used to buy the new Treasury, which I can verify from experience.

Sith.

I tested this out several weeks ago with a short T-Bill and there was a one week delay at Schwab. But today I was working on 52-wk bills. No way I'm going to be out of the market for 4 weeks.

But then my T-Bill ladder is temporary anyway until the Fed stops raising rates every ~4wks.

[FactualFran]

People have reported that with Schwab auto roll you are out of Treasuries for a period of time between maturity and the next purchase. At Fidelity, proceeds of the maturing Treasury are used to buy the new Treasury, which I can verify from experience.
I tested this out several weeks ago with a short T-Bill and there was a one week delay at Schwab. But today I was working on 52-wk bills. No way I'm going to be out of the market for 4 weeks.

The answer to the question "What investments are eligible?" in the CD and Treasury Rollover page at the Schwab web site includes:

New-issue Treasuries bought at auction
They can be rolled into 4-, 8-, 13-, and 26-week bills at auction.

Schwab does not autoroll 52-week T-Bills.