Treasury Bond and CD Buying - FAQs and Book Recommendations

Interest Rates are Up Again - Time to Lock in Gains! 

Once again, the Federal Reserve is upping the interest rate by .75 basis points.*  It's a golden time for those wanting secure investments that pay a pretty interest rate and the rates may go even higher according to Fed Reserve Chairman Jerome Powell.  

Here is what US Treasuries and CDs are paying at Fidelity.com today, 11/4/2022 at 8:23 a.m up to 5 year maturity.  Not only can you purchase these with money in your after-tax brokerage account there, but you can also purchase via your IRAs or 401K.  

Real-Life Case Example: 

I have an extra $10K that is coming to maturity in my CD ladder.  (I bought it as a short-term, 6 month CD of $9,000 back in May of 2022.  It has only been accruing .95% interest at the time.  Less than 1%).  

Now is my chance to lock in a longer, better, very secure rate with a CD or a bond.  You can do the same!

CDs offered on this platform at the 2-year mark are paying higher rates than Treasuries.  They are also very safe, as they are F.D.I.C. insured.  I'm planning to pick up a 5% CD next week for the 2-year short term.   It's only a $ 500-a-year return, but I'll take it!  If I had more cash to invest, I would.  

CD ladders have really helped my F.O.M.O. with current CD and bond rates.  I have new money freeing up for investment every few months.  Keep in mind this money has only been earning .05 - 1.5% for a while, so it needs a boost!  

Are you planning to buy a CD or bond soon and have questions? 

Google searches about bond buying today that are most common include these:

• Buying bonds at a discount
• Buying bonds on a premium
• Treasury Direct

I'll dive a bit deeper into each below, but if you are looking for an excellent beginning primer on the subject in audiobook form, check out "Step by Step Bond Investing" by Joseph Hogue, CFA. (paid link) 

I did not receive this book free of charge as a payment to promote! It was my own purchase and I believe it cost only about $6.00.  I was so impressed with the ease of understanding baked into the 1 hour or so it took to listen to the book, that I am hot to recommend it.  

Here are a few highlights from the book:  

Buying bonds (or bills) at a discount

The author, plus info from this Investopedia page about T-bills, gives simple straightforward advice on buying bonds at a discount.  Let's use this Treasury bills purchase as an example: 

• Let's say you purchase ten Treasury bills for $100 each.  They mature in 52 weeks. The T-bill sales info declares a 5% coupon rate or yield to maturity (YTM) rate.  Because the bills are sold at a discount, you only pay $950 for all of them.  At the end of the 52 weeks, you will receive $1,000 back.  
• Your yield is the difference between the T-bill's discounted purchase price and the face value due back to you on the maturity date.  

• Test your knowledge -- what if the YTM was only 3%?  Did you come up with $970 as your discount rate?  It would cost you $970 to buy the bills that would return $1000 52 weeks later

Buying bonds at a premium

Let's use a Treasury Bill as an example.  If a Treasury Bill for sale has a face value of $1000 is paying 7% interest and matures in 10 years when new TBills are only paying 3%?  You will need to pay a premium to get your hands on the bill.  

A simple explanation is available another good reference, this book "Bond Investing for Dummies" by Richard Wild, MBA. (paid link).    "Don't ask why, but bond people quote the price of a bond on a scale of 100.  If a bond is selling at par, or face value, it is typically quoted as selling at 100...If that bond is selling for 105, it's a premium bond, and you need to fork over $1,050."  

I didn't get a free copy of this book to include in this blog post, but I do get a small affiliate commission if you click the link and purchase the book on Amazon.  If you search your local library, you can probably find a copy, that's where I got mine.   It's a good reference book for your personal finance library.  I will probably buy a copy when my library loan runs out of time.  

A Beginner's Look at Investing in Treasury Bonds

1.  Get your Treasury Direct account set up if you don't have it already.  It's very simply explained at treasurydirect.gov  

2. Once you have your treasury direct account set up, it's fairly straightforward to use the platform.  

First, take note of the menu bar across the top of the first page of your account. (see below image, it begins with "My Account" on left and ends with "Gift Box" on right.

3. Click on "BuyDirect" blue tab to purchase your bonds.  

4. Immediately below is the list of products you can buy from that page, starting with "Marketable Securities:  Bills - Short-term securities of 1 year or less" 

5.  I clicked on Bills, just as an example.  And this is the screen that appeared. 

    a. You will see a section of a list...be aware that you can click through to multiple screens.  The first screen starts with the button you see below labeled "4-Week."  If you wanted to see purchase information for 4-week treasury bills, that's the button you would click into. 

 Scroll down on this blog page to see a screen shot of the end of the product list. 

Easy Way to Brush Up on Your Financial Literacy - plus Bonus recommendation on Bonds

If you or someone you love needs a refresher in the basics of financial literacy, the National Financial Educator's Council (NFEC) has very inexpensive, yet comprehensive educational programs led by certified instructors.  

Many of us get our basic financial education from a variety of sources, not all of them objective.  

Financial planners or product salespeople are often knowledgeable go-tos for answers, but how do you know whether or not there is a conflict of interest? 

  

That's where basic financial literacy comes in. The NFEC has several programs to choose from which is why I chose it for my own certification. 

Some examples below:

- Budgeting

- Improving Credit

- Higher Education Decisions

- Getting Out of Debt 

- How Taxes Affect You

- Buying a Car

- Is it time to Buy a Home? 

- Getting Prepped for Retirement 

Those certified in financial instruction offer group classes or one-on-one sessions that are very low in cost. No product sales pitches are involved.  And the courses can be tailored to the group or individual's needs.

The NFEC spearheads the financial wellness movement around the world through advocacy and raising awareness. They are focused on promoting financial wellness through promoting the adopting of financial literacy programming into schools, encouraging individuals to work toward greater financial strength, getting families involved in teaching kids about money, and sharing research with the industry to empower broader advocacy. More information about the NFEC is here

https://www.financialeducatorscouncil.org/

Bonus recommendation - I've just finished listening to this quick Step by Step Overview on bonds.  Easy and quick overview of how to buy them, what to buy and how bonds work.   I'm using it to help me ladder my way into some safety and good returns.  The book was less than $10.  If you've already read this book, I would love to hear what you think. 

Online Shopping Deals for Dresses, Bags, Other Clothing - Inflation Mitigation

How to get the best clothing deals on Poshmark

Since I have been both a buyer and seller on Poshmark, I can give you an insider's view of how to get the best deals on that platform. Inflation mitigation requires that we closely watch and prioritize all of our spendings, but, but, but we still need clothes! 

Once COVID lockdown changed how we dress for work, the vintage and second-hand clothes markets, both real-life and online shopping marketplaces, have been saturated with beautiful women's clothes.  The clothing is well-tailored and very suitable for the office, but no one wants to wear this wardrobe working remotely from home.  

There are great online shopping deals and platforms for dresses, shoes, electronics, ... heck, they even have fishing gear and household items.  Some discount shoppers and sellers focus on Ebay, Mercari or Etsy, for example.  

In my case, I focused on using Poshmark to pick up new-to-me items for my capsule wardrobe and even sell items from my own closet  https://poshmark.com/closet/isabettarose.  (I'd rather sell or donate gently used clothes than feed the fast-fashion marketplace looking for new, cheap alternatives).

Top 3 Reasons You Will Get a Great Deal on Poshmark from a Seller

1.  It's easy!    You can search by brand, color, most recently listed, lowest cost to highest cost, etc.   Here's a screenshot of a recent search I did for Coach brand bags.  The results returned options priced everywhere from $27 to $375 in the first row alone. 

This is the first four of HUNDREDS of Coach bags that were listed at incredible prices. 

Search "Coach Bags" on Poshmark - First 4 Items Listed $27-$375

2. Easy discounts,  too.  When you "like" an item you see on the app, you will receive all additional specials that the seller may offer on the item. 

Notice the numbers next to the redline hearts below the photo -- that's how many people liked the item. Twenty-six people liked the Vintage Coach Tan Suede Bag, for example.  

Periodically the Poshers, i.e., people who open a closet, will offer special discounts to "likers." 

The Poshmark team offers special shipping discounts on certain days, as long as an item is offered to likers at 10% -  40% off the lowest price in the last 90 days.  This is good news for anyone who likes the item, as you are going to receive that discount on the item, along with reduced or free shipping. 

Protip -  You can also filter for items that are NWT (new with tags).  You will receive the item at the negotiated discount price and it's brand new!  Now that's a deal. 

3.  First-time buyers can get an initial purchase discount when they set up an account and make the first purchase over $5.  It just requires using a code at check out.  You can use my code @isabettarose or any other posher's closet name with the @ sign ahead of it. 

The Good and the Bad "Real Life" Examples

Good- I used Coach bags as my example in this blog because I purchased this beautiful vintage Coach bag last year from a Postmark seller @faboy  

My Burgundy Suede Coach Hampton Bag

I love love love!!!! my Coach Hampton bag.  I had been searching for a new version of this bag style, as I once owned the same model in a light tan color and literally wore the purse out.  Since they weren't being made any longer, I hit the vintage sites and found this model in a different color. 

At first, I backed away from the deep burgundy.  But then I realized that it is really a beautiful, classic pop of color for most of the items in my closet.  In fact, this burgundy suede has held up better, so far, than my tan suede bag, in great part because of the color.  If anything has stained it yet, I can't see it.  

The price was 50% of what I would pay for a new lower-end Coach bag, plus it was shipped to me in perfect condition.  

You can probably get even better buys now that the second-hand clothing marketplace is ever more saturated with pretty wonderful deals.

- If I hadn't gotten a product that matched the photos and description on Poshmark, I could have filed a return request.  The app offers buyer protection.  Any type of return request that is validated as "not matching initial posting description" is a ding against a seller's Poshmark account status, so sellers do the best they can to make sure every customer is happy!   

For items over $500, they offer brand authentication services as well.  If you are looking for Chanel or Hermes or Louis Vuitton, I'm sure this authentication would be very valuable.  

- Also, sellers are reviewed with stars and notes, so it's even more incentive to keep customers happy. 

The Bad and How to Avoid It.  

As with any online transaction, beware of scammers!

- I have heard about one luxury-item scammer on the site.  But Poshmark can take action against any that scammer, or any others, if you conduct the sale via the site.  Don't be dupped into going offline to conduct the transaction, there is no protection there. 

- Also, beware of "mystery box" offerings.  Poshmark can't help you with these offerings as nothing is promised in the description.  

- Only use a credit card that handles disputes well.  I always use my American Express card as they have backed me up on every single dispute in the last twenty-five years of holding the card. 

Have you used Poshmark, or Ebay or Etsy and scored an unbelievable deal?  Or maybe you faced a hurdle that you would like to share?  Please comment below!