Talk of The Villages Florida - View Single Post - How High Will It Go?
View Single Post
 
Old 02-18-2023, 12:27 PM
CoachKandSportsguy CoachKandSportsguy is offline
Sage
Join Date: Jan 2019
Location: Marsh Bend
Posts: 3,698
Thanks: 650
Thanked 2,691 Times in 1,315 Posts
Default

Quote:
Originally Posted by daniel200 View Post
I prefer to purchase Treasuries on the secondary market (Fidelity) and not newly issued bonds. A bond that was issued at 1% will trade at a discount so that its total yield to maturity (interest plus capital gains) is similar to current yields (about 4.6% for a 2 year t-bill) … So if I buy a 1% bond that matures in 2 years; I will pay taxes on the 1% interest yearly. When the bond matures in 2 years, I will have a long term capital gain of (4.6% - 1%) x 2 = 7.2% when i file my taxes
this is called tax efficient investing, whereby you buy for capital gains versus interest income, using the same instruments, treasury or corporate bonds. .