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SW Ontario | I have some cash on hand that I would potentially like to use about a year from now so I walked into my local bank last week looking to buy a treasury bill (T-bill). I got a blank stare from the teller. I told her again what I was looking for so she went and talked to someone in the back. She came back and gave me the name of an investment advisor with the bank. I called him this week and told him what I wanted. He instead told me that I should invest the money in a high interest savings account. He said he hadn't sold a T-bill to an individual in ages. So I now have three options:
1) go to a different bank and see if they will sell me a T-bill. The bank I deal with is one of the big five banks in Canada and I don't really want to switch for this reason. They stated they could probably do something if the investment was a million dollars or more.
2) buy a T-Bill mutual fund from this same bank. The management expense ratio is 0.5%, leaving only a 0.2 % return year to date.
3) leave the cash sitting in my bank account or switch it to a high interest savings account with a return of approximately 0.5%.
The reason for wanting to place the cash in treasury bills is because it is supposed to be the safest way to store cash short term. A T-bill is guaranteed by the government that issues it. A GIC or cash sitting in a bank account is guaranteed by the bank ( and FDIC in case of default). If the bank defaults and FDIC has inadequate funds to cover the default, (we get bail-ins), I lose a significant portion of my deposit.
What irks me most is that the banks have all this control. When I was a kid, one could walk into a bank and buy a T-bill in just about any denomination. Now, even with the T-bill mutual fund, the bank is making more money on my deposit than I am.
What would you do?
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Treasury bill bank rant
