Bond Investors Face Delays Moving Their Money From TreasuryDirect
Digest
Investors who bought inflation-adjusted savings bonds through Treasury Direct are experiencing delays of up to a year to transfer their investments to brokerage accounts. The Treasury Department is struggling to manage the surge in accounts and customer service requests, leading to a backlog in processing external transfers. This surge in accounts is attributed to the high interest rates on I bonds, which have attracted many investors to the Treasury Direct platform. However, the delays in processing external transfers are causing investors to lose liquidity and potentially miss out on investment opportunities. Many investors believe there's an advantage to buying treasuries directly through Treasury Direct, but mainstream brokers like Vanguard, Fidelity, and Charles Schwab don't charge extra fees for new issue treasuries. This means investors are sacrificing liquidity for no price advantage. The Treasury Department acknowledges the frustration and says they are working on ways to modernize their technology and ease the backlog.
Outlines
Treasury Direct Delays: Investors Stuck Waiting to Access Their Investments
Investors are facing delays of up to a year to transfer their investments from Treasury Direct due to a surge in accounts and a backlog in processing external transfers.
Treasury Direct Delays: A Closer Look at the Issues
The Treasury Direct platform has seen a surge in accounts due to high interest rates on I bonds, leading to delays in processing external transfers, with some investors waiting up to 12 months to access their investments.
The Misconception of Treasury Direct Advantages
Many investors believe there's an advantage to buying treasuries directly through Treasury Direct, but mainstream brokers like Vanguard, Fidelity, and Charles Schwab don't charge extra fees for new issue treasuries. This means investors are sacrificing liquidity for no price advantage.
Keywords
Treasury Direct
A government website that allows consumers to buy treasuries and other investments directly from the government. It has seen a surge in accounts due to high interest rates on I bonds, leading to delays in processing external transfers.
I Bonds
Inflation-adjusted savings bonds that are pegged to inflation. They were offering rates of nearly 10% last year, leading to a surge in demand on Treasury Direct.
External Transfers
Transfers of investments from Treasury Direct to a brokerage account. These transfers are facing significant delays due to a backlog in processing.
Liquidity
The ability to easily convert an asset into cash. Investors who buy treasuries through Treasury Direct are sacrificing liquidity due to the delays in transferring their investments.
Cash-Like
A term used to describe assets that can be easily sold and converted into cash. Treasuries are typically considered cash-like, but the delays in transferring them from Treasury Direct are making them less liquid.
Q&A
Why are investors facing delays in transferring their investments out of Treasury Direct?
The Treasury Department is struggling to manage the surge in accounts and customer service requests, leading to a backlog in processing external transfers.
What are the steps involved in transferring an investment out of Treasury Direct?
Investors must first determine if their investment can be sold. If it's a marketable security, they must wait 45 days, then print a form, get a medallion stamp, and mail it in.
How long are investors waiting to transfer their investments?
The Treasury Department estimates that it could take up to 12 months for external transfers to be processed.
Is there any way to avoid the delays in transferring investments out of Treasury Direct?
Investors can redeem their bonds early and transfer the cash to their brokerage account, but this will result in a loss of potential interest earnings.
What is the Treasury Department doing to address the delays?
The Treasury Department acknowledges the frustration and says they are working on ways to modernize their technology and ease the backlog.
Show Notes
A rush of demand on the Treasury Department's antiquated website for buying government debt means some investors could be waiting up to 12 months to shift their money to a brokerage account. Wall Street Journal personal finance reporter Imani Moise joins host J.R. Whalen to discuss how investors are dealing with the delay.
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