Ask Terry Questions T-Bill interest calculation

T-Bill interest calculation

By Terry Savage on January 30, 2024 | Chicken Money

Terry, I have purchased several 26-week t-bills over the past year as you have suggested on WGN. Each has been reinvested. At the time of reinvestment, my bank account was credited an earnings/interest/yield(?) amount close to what I expected (as per the discounted purchase price), but always a bit more or bit less than the expected amount. Can you tell me why this would be? And can you explain interest rate vs. yield rate? Why are the two values different? I’ve tried to find the answer on and by phone with no success. Thanks for your reply.

Terry Says

They calculate it correctly so don’t worry. Yield is an “annual” rate, but you’re only investing for 6 months.



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