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Comment by dkjaudyeqooe | Hacker News Reader

Just buy Treasury bills. They're backed by the backer of the FDIC. Go directly to the source of all financial security.

They're "risk free".

Doesn't that suffer from some of the same risks as what brought SVB down? I'm not super educated when it comes to the US financial system, so probably high chance I'm wrong. But as far as I understand it, T-bills suffer from the "interest risk" in that if interest rates rise, newer T-bills are more valuable so it'll be harder to sell the ones you have if you want to sell them before they mature. They might also not keep up with inflation, so the inflation could be higher than the yield, meaning you'd lose purchasing power effectively.

But again, I might completely misunderstand things, but I don't think there is any investment that is absolutely risk free, which I guess is why you put it in quotation marks in the end.

> if interest rates rise, newer T-bills are more valuable so it'll be harder to sell the ones you have if you want to sell them before they mature.

As others pointed out, T-Bill indicates a shorter term than T-Note which is shorter than T-Bond... but either way, it's not that the instruments are hard to sell, it's a very liquid market, but the prices rapidly adjust so that yield to maturity for a given maturity date is broadly similar regardless of the initial yield and coupon.

It may be emotionally hard to sell and realize a loss if interest rates rise after your purchase, but it's not transactionally hard. If you are subject to a mark to maturity reporting regime, it may also look bad on your balance sheet, but I don't believe individuals would be subject to that.

People like Wealthfront offer $3M in FDIC insured deposits and 4.3% interest (from their recent email). Others have similar offers or you can just spread your money around to different banks. That should cover most stuff.

For the rest of your money you can estimate when you'll need it and buy the appropriate T-bill, down to 4 weeks. Everything you say is correct, but only on that timescale.

The only risk is the US government collapsing, but in that eventuality you are very likely to be completely fucked no matter what you do.

T-bills have very short duration, so interest rate changes have smaller effect on their value.

Think of the duration as a lever, the longer the lever the larger the move in value that interest rate change make.

As an individual investor, you don’t have redemptions pressure from customers asking for their money back. If you fee that you don’t need the money before X years, you can get treasuries for those years and not sell them before maturity.

You're correct, but even underwater T-bills are better than holding the money. Its essentially both insurance and additional interest. the only risk is having to sell them at the wrong time.

SVB wasn't buying Treasury bills (<1 year term). They were buying notes at like 5 years and longer term bonds.

So they suffer from the same type of interest rate risk, but at order of magnitude lower impact.

You are not a bank and need to ensure far less cash.

https://www.treasurydirect.gov/marketable-securities/tips/

You could buy TIPS or I-bonds.

You just have to be able to click in your password on possibly the worst designed website in finance!

You don't have to buy treasury bills straight from the treasury. Buy them from Schwab and other brokers to spare yourself that ugly website.

You can paste the pw into the field if you edit the html!

There are autohotkey-style scripts for every OS that emulate a keyboard for paste, which can be mapped to a variation of the keyboard shortcut for paste. Very fast to install and you never have to edit html again for this purpose.

This is my method. A little edit and I don’t need to use that dumb keyboard.

Unless the US hits the debt ceiling.

The constitution says that the US has to pay its debts, but it doesn't say that about its other expenses, so that isn't necessarily true.

Then everything is fucked.

I see this type of thinking a lot online, and while it makes sense to a certain extent to not overly prepare for unlikely doomsday scenarios where "you'd have bigger problems", it still makes sense to not-overly prepare, if that makes sense.

For example, failed states (even after complete destruction due to war), have a way of honoring primary residence property rights even after the rebuild of the country, many times including secondary properties that are not your primary residence (ie germany, poland after wwii, more examples exist). So if you know this history, you'd do well to make sure you own some property, not just "paper".

This is only one aspect of investing, but I've seen many people claim from the same source argument things like "holding REITs is better than a home because it's way more liquid and flexible", which... yes, but.

Property rights remind me how most(-ish) cities are older than the countries they're in.

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