Now, you are a F.I.R.E.-Type seeking financial independence like myself. In that case, we always try to calculate the best way to make a great return on our investments while preparing for emergencies like building our emergency fund. Growing Passive Income Generators (PIGs) through 4-week T-bill ladder for weekly income.
I’ve kept almost all my 6-Month Emergency Fund in a High Yield Savings Account and A Money Market Mutual Fund. Now that T-bill rates are higher and offer lower tax obligations(no state or local income taxes, verify this with your Tax Professional ), I want to look at T-Bills for my Emergency Fund.
I am contemplating building a 13-week T-Bill Ladder. Still, since dealing with my emergency fund, I decided to make a T-Bill Ladder with less money and cycle faster to get my feet wet first.
I used only $400, divided into four 4-week T-Bills(with different T-Bill maturity dates), and built a simple ladder I can work only 4 weeks from the start.
What Is A Treasury Bill Ladder?
I covered more about what a Treasury Bill ladder is when I talked about my plans to build a 13-week T-bill ladder in a previous post: How To Build T-Bill Ladder Emergency Fund (My Plan).
A Treasury Bill Ladder is an investment method where you divide your investment money into sequentially maturing T-Bills and auto-invest into the next T-Bill cycle, creating a continuous stream of maturing T-Bills(generating passive income through interest per se What Is A Zero Coupon Bond? – FAQ) and re-investing principal bank into new T-Bill, machine.
What Is The Yield On A 4-week Treasury Bill?
As of Nov 2023, at the start of this experiment, the 4-week T-Bill: >5.25%
Current rates: https://ycharts.com/indicators/4_week_treasury_bill_rate
FYI, the rates I am getting from my HYSA and Money Market Mutual Funds(Nov 2023):
SoFI HYSA Yield: 4.60% APR
Source: https://www.sofi.com/banking/savings-account/
TSCXX Yield: 5.22% 7-Day SEC Yield
Source: https://www.troweprice.com/personal-investing/tools/fund-research/TSCXX
How Did I Set Up A 4-Week T-Bill Ladder For Weekly Income?
These are the steps I took, with screenshots(personal information redacted).
Please understand I am just documenting what I did, not in any way saying this is correct or a good investment. Do your own research!
The service I used was TreasuryDirect.Gov ( https://treasurydirect.gov ). I am told there are no delays in T-Bill re-investments, and your money always works for you.
Building A 4-Week T-Bill Ladder.
I already have an account created on Treasury Direct and have already linked one of my Banking Accounts to the service.
1.- Go To TreasuryDirect.Gov and Click “Log In“.
2.- This is the second page, click “Next” again.
Here I also “Create a New Account” in the past to setup my account.
3.- Entered My Account Number and Click “Submit“.
After entering your account number, click the Submit Button
4.- Entered My One Time Passcode (OTP), and Click “Submit“
My OTP, One Time Passcode, was sent to my registered email address. It’s a pain, and I want to use an Authenticator App or FIDO key (like Yubi Key), but I have to accept this level of security. Keeping my Email account safe.
5.- Entered My Password, And Then Clicked “Submit“.
Note, an image I picked during my account setup is being displayed with a note. This is your way of ensuring you are interfacing with Treasury Direct. An old way to prevent Website Spoofing, but works. As long as you remember the photo you picked and your message is persona and about the picture, I guess.
6.- Logged In, I Verified My Information, Then Clicked “Verify“.
Now of course, if any of my information needed to be updated, I would have edited my information before moving forward.
7.- From My Dashboard, I Clicked “Buy Direct“.
As you can see from my Dashboard, I’ve not purchased T-Bills before, this is my first time and hope you can learn from my experience.
First test a 4-Week T-Bill Ladder for weekly income, next move on to creating a 13-Week T-Bill Ladder to hold my 6-Month Emergency Fund.
8.- Selected T-Bills, and Clicked “Submit“.
9.- Select The T-Bill I Wanted, Then Clicked “Submit”
In this step, I selected the first one, but I am concentrating on the first four 4-week T-Bills, creating a four-rung ladder with maturities one week apart.
Turning on the auto reinvest, I’ll make a T-bill ladder that creates weekly passive income.
10- Scroll down, Turn On Auto Reinvest, Check Money Settings, And Then Click “Submit“.
I have more than one account, so I was presented with a drop down for where the money came from, and where the money goes to as each T-Bill matures. I verified these accounts were correct.
I turned on Re-investments, by selecting Yes, and maxing out the intervals to equal 2 years. 24 times in the case of 4-week T-Bills.
11.- Verify My T-Bill Selection And Settings, Then “Submit“.
I checked who it’s registered to: my name. What type of T-Bill: a 4-week T-Bill. Auction date (purchase date). Purchase Amount, in this case, $100. Source of purchase money. Where to send maturity money.
I reviewed the Terms before clicking Submit, so I understood what I thought I was doing.
12. – T-Bill Purchase Submission Confirmation Message.
I got this T-Bill confirmation page. It showed me what I selected.
This was my first ever T-Bill purchased. Leaving money in a HYSA, or Money Market Mutual Fund, seems easier with fewer steps. Still, the higher return with exemption from State and Local Taxes makes this worth it.
I have purchased 1 of the 4 4-week T-Bill rungs in my ladder, so I clicked “Buy Direct” and purchased the remaining 3 T-Bills.
13.- Repeat To Purchase All T-Bills, and Review Purchase Summary From Dash Board.
My Dashboard still doesn’t show any held T-Bills or other investments since this is my first time. However, at the bottom of the Dashboard is an “Account Activity” section, and when I clicked on the link, I found a listing of my recent planned purchases.
14.- Review All My Rungs In My T-Bill Ladder.
As you can see, 4-week T-Bills, with 4 Rungs in my T-Bill Ladder, with maturity dates one week apart, and auto reinvest turned on, I now have created a T-Bill Weekly Passive Income Generator.
What Next?
The goal here was to try out creating my first T-Bill Ladder, a 4 Week T Bill Ladder. At this point, I only have purchase orders for the next four weeks.
I will watch as each rung of my 4-week T-Bill Ladder is purchased, ensuring money comes from the correct bank account. Also watching as the actual T-Bills started showing up on my dashboard.
After the 4-week T-Bills start maturing, I will verify that the proceeds of the maturity dates get deposited into my bank account, and new 4-week T-Bills are purchased.
The goal is to confidently place 6 months of expenses into a T-Bill ladder holding my emergency Funds in one month.
I will update you on my findings.
 Myself with an interesting Bull Sculpture. Notice: No Lambo’s. :/ | Hi I’m Tom, A Blogger And A PIG Farmer. PIG Farmer as in I grow Passive Income Generators(PIG’s). I’ve been playing with stocks, mutual funds, and options for decades, as well as always working on my side hustle stacks. Unlike what you read online, I’ve yet to find a way to get rich quickly. Get Rich Quick isn’t happening for me. My journey has been long and continues. I hope to have so many PIGs I can stop working at my current job and volunteer as a medical worker overseas. Still waiting, but getting there. I still am a family man, and while on this Journey of Growing PIGs. I wanted to share my adventures(ups and downs), hoping you will contribute with your feedback and comments. Fun Fact: In my spare time, I am a Band-Dad! |