Comments on: Update on T-Bill Taxable Equivalent Yield

By: T-Bill Investment Rate: Is it APR or APY? And What Is Your Taxable Equivalent Yield? | The Sun’s Financial Diary | A Personal Finance Blog on Saving and Investing

Tue, 15 May 2007 19:39:34 +0000

[...] above EAPY is assuming you itemize when filling your federal tax returns. An update is available here for non-itemized [...]

By: T-Bill Investment Rate: Is it APR or APY? And What Is Your Taxable Equivalent Yield? - The Sun’s Financial Diary - Accumulating wealth is like building The Great Wall, one brick at a time

Sun, 19 Nov 2006 15:02:17 +0000

By: The Sun

The Sun — Fri, 10 Nov 2006 22:23:37 +0000

That’s ture. The equivalent yield is kind of a theoretical number because every week there will be a different rate and for every T-bill purchase, the rate is locked for four weeks. If the purchase is made every week, then there will be 54 rates through out the year, the calculation will be quite tedious.

By: ricemutt

ricemutt — Thu, 09 Nov 2006 18:05:52 +0000

That was horrible grammar … “even more less”. Ugh. I meant that I’d be getting even less in return if I’d chosen an investment vehicle that was subject to state income taxes.

By: ricemutt

ricemutt — Thu, 09 Nov 2006 18:04:36 +0000

Yup, as non-itemizers living in California (we’re renters and not homeowners), T-bills are certainly attractive. I still have to remind myself though that tax-effective yield is not the same thing as the “actual yield”. In other words, that ~6% effective rate is for comparison purposes only, and at the end of the year, I’m actually making less than that (and even more less if I’d chosen a taxable vehicle). An equivalent and more accurate comparison method would be to compare investment vehicles with all applicable taxes included, but it’s easier to do it the other way.