Probably easier to ask this with an example (amounts rounded for simplicity, I realize the math may be $1K aggressive, please put that aside)?
TIRA with $210K in cash reserves and nothing else. I cannot buy any more than $210K face value worth of 52 week bills in one shot, even though that will only cost me about $199K. If I want the full amount invested, I have to buy another $11K face value worth of 52 week bills the next month. However, I can submit a purchase for $221K face value 52 wk bills with only $210K ($209.5K cost) in cash reserves IF I have more than $11K in other holdings - presumably Vanguard wants to cover the purchase amount in case I try to buy more than I have in the account.
(However) If I want to ladder treasuries, 1, 2 & 3 years with my $210K - I could buy $77K 52 wk ($73K cost) and $77K 3 yr ($65.8 cost) on 7/3, leaving me $71.2K cash reserves. On 7/15 I am assuming I can buy $77K 2 yr ($69.3 cost) - more than I have in cash reserves - because they could liquidate one of the other treasury holdings. So I would then have $231K in laddered treasuries and $1.9K in cash reserves left over.
Now that I've given you a headache (sorry), is my assumption in red correct?
TIRA with $210K in cash reserves and nothing else. I cannot buy any more than $210K face value worth of 52 week bills in one shot, even though that will only cost me about $199K. If I want the full amount invested, I have to buy another $11K face value worth of 52 week bills the next month. However, I can submit a purchase for $221K face value 52 wk bills with only $210K ($209.5K cost) in cash reserves IF I have more than $11K in other holdings - presumably Vanguard wants to cover the purchase amount in case I try to buy more than I have in the account.
(However) If I want to ladder treasuries, 1, 2 & 3 years with my $210K - I could buy $77K 52 wk ($73K cost) and $77K 3 yr ($65.8 cost) on 7/3, leaving me $71.2K cash reserves. On 7/15 I am assuming I can buy $77K 2 yr ($69.3 cost) - more than I have in cash reserves - because they could liquidate one of the other treasury holdings. So I would then have $231K in laddered treasuries and $1.9K in cash reserves left over.
Now that I've given you a headache (sorry), is my assumption in red correct?
Statistics: Posted by Midpack — Sat Apr 27, 2024 2:02 pm — Replies 2 — Views 291