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When you set a T-Bill (say 3M) to reinvest on TreasuryDirect, will there be a one week gap when reinvesting (due to auction scheduling) or will you be fully vested for 2 years (get 2 year's worth of interest without gaps)?

I'm trying to guesstimate the optimal quantities to invest in each duration, so having gaps or not will affect the calculation.

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There will not be any gaps.

I have an example from my Treasury Direct account. I am looking at my 4 week T-bills. They all have 3 or 4 more rollovers.

On Thursday September 8th there was an auction of 4 week T-bills. The purchase will be made Tuesday September 13th. On that day a 4 week T-Bill will be maturing, but I am automatically reinvesting it.

Lets say that I am working with $5,000 values. If I wasn't doing the automatic reinvestment the treasury would be sending $5,000 to my bank account on September 13th, and I wouldn't own any T-bills. But because it is under Automatic reinvestment they will only send $9.72 which represents, the interest I will earn during the next 4 week period. When the rollovers end next year, they will make a final disbursement of $5,000.

If you are buying T-bills of a different length the actions might be on a different day of the week, but it still works the same way. I think 13 week bills auction on Tuesday and settle on Thursday.

If I look at my account on the Treasury website the T-bill that is between the auction date and the reinvestment date shows a status of "Pending Reinvestment". If I wasn't reinvesting automatically it would show a status of "Pending Maturity".

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  • That's great! I also like how they send the interest to the bank account - the separation makes it easier to keep track if I go into negative cashflow (overspending) on a monthly basis!
    – kfmfe04
    Sep 10, 2022 at 22:59
  • One other question - will there be gaps when you switch duration - say from 4 week to 8 week and then back to 4 week? (Assuming that they auction on the same dates) I'm thinking the answer is no gaps, since at the end of 4 weeks, your principle goes back into your bank account, which will be available for TD to withdraw for the 8 week. It's a bit confusing because it'll be happening on the same day. They'd have to execute everything in the right order, though.
    – kfmfe04
    Sep 12, 2022 at 15:22
  • If the auction dates and purchase dates are the same day of the week. treasurydirect.gov/instit/auctfund/work/auctime/auctime.htm Sep 12, 2022 at 16:52

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