T bills at Vanguard: I purchased $5k and after 7 months got $5k back

[libbi]

@kabeier It’s basically the same. If the interest on a bond goes up then the price of the bond will fall to accommodate that interest. If you bought a bond and the rates go up and then if you sold it, you would most likely lose money until you hold to expiration. The difference is the ETF wouldn’t have a maturity, but if you waited the long term, then the difference between prices and coupon interest would average out.

 

[deckm116]

@kabeier Not sgov

 

[frenzfries]

@kabeier https://www.northerntrust.com/docum...y/maturity-bond-funds-vs-individual-bonds.pdf

Interesting article on Bond funds and the case for them.

 

[maurits]

@aloverofrigtheousness Zero coupon bonds are bought at discount to par. In this case the par value is 100 and you bought at 99.9772. You bought it at a discount and it matures at the principle or par value. The difference between the par value and price paid is the “interest” received. This is how US T Bills are issued.

 

[readingdad]

@aloverofrigtheousness T bills have no interest payments. You buy them at a discount and redeem them at face value. If you paid $4886, you made $114 interest in 7 months. That is a bit under 4% yearly interest rate. I bet that is what happened. Check back at what you paid.

 

[fromsalemwithlove]

@aloverofrigtheousness $114 interest is what you report to IRS. There is no State tax from it. Bonds are discounted and when it matures you get the par value.

 

[aloverofrigtheousness]

Thank you all! I appreciate you!

 

[soi]

@aloverofrigtheousness As mentioned you buy them at a discount to par (face value). You can put that discount difference in another investment, like a HYSA or MMF to further earn interest.

 

[deckm116]

@aloverofrigtheousness Sgov etf is easier

 

[christiandave33]

@aloverofrigtheousness I think you need some guidance on how those investment vehicles work so you can better understand where and when you actually got the return on investment