W. Wells wrote:
- quote -

I'm not sure what you mean by "the equivalent". The last 91 day T-bill
auction had a 5.1% (actually 5.088%) rate. The taxable equivalent
yield, in your tax brackets, assuming that you itemize and deduct state
income taxes is:

5.088% * 1 / [1 - 7%*(1-25%)] ~= 5.37%

That is, if you had a fully taxable investment yielding 5.37%, then
you'd pay 7% of that in state taxes (T-bills are not state-taxable). So
you'd pay .38% in state taxes, leaving only 4.99%. But, you'd deduct
that 0.38% on your federal tax, giving you a reduction in taxes of 25% *
0.38%, or about 0.09%. Add this tax savings back to the net yield and
you get 5.08% yield.

So, you need to look for something with a tax-equivalent yield over
5-3/8%. I don't know of anything outside of treasuries that will give
you that sort of yield, with the same level of security and liquidity.

Looking at the recent auctions on T-Bills, you might consider going out
to six months (to pick up 1/4% or so), but that's about the only obvious
thing I see.

http://wwws.publicdebt.treas.gov/AI/OFBills
http://www.bloomberg.com/markets/rates/index.html (See Treasury yield
curve toward middle of page - peaks [at] six months)
--
Mark Freeland
nNeEwTs[at]sonic.net

I have been putting my short term money in 90 day T Bills
waiting for the fed to quit raising rates. My state has a 7% tax and I am in
the 25% Fed Bracket. The equivalent is 5.01% Anyone have any better ideas?