U.S. Treasury Investment Plan

1. U.S. Treasury Investment (1) – Opening Fidelity IRA/CMA Accounts
2. U.S. Treasury Investment (2) – Traditional IRA vs. Roth IRA (+Backdoor Roth IRA)
3. U.S. Treasury Investment (3) – Direct Purchase vs. ETF Side Note – 2024 Pension Portfolio Plan
4. U.S. Bond Investment (4) – Real-world Bond Purchase

The first post of 2024 outlines a plan for U.S. Treasury investments. Currently, the pension strategy allocates 100% to the U.S. stock market (index) due to my aggressive investment approach. However, the need for hedging assets has been contemplated. Though individual preferences may vary, I aim for a 7:3 ratio of risky to safe assets upon retirement. Despite a higher proportion of risky assets, holding stock market assets from an early age and anticipating low volatility over time are driving factors.

Why the decision for U.S. Treasury investment now?

Aligning with retirement, I intend to gradually increase investment from now on, leverage IRA account advantages due to U.S. residency, and capitalizing on historically high U.S. benchmark interest rates. Detailed discussions on points on IRA account will be covered in subsequent posts.

As of January ’24, the U.S. benchmark interest rate is 5.25%-5.50%. Speculating beyond this is cautious, as future rate hikes remain a possibility. However, considering the current economic conditions post-COVID, a significant rate increase seems unlikely. Acting on this perceived timely opportunity, the author, albeit uncomfortable with this timing-driven decision amid index investing, decided boldly, believing such moments are rare.

How to Open IRA Account

U.S. Treasury investment can be made through treasurydirect.gov or brokerage accounts. Opting for brokerage Roth IRA accounts offers tax-free benefits on interest or bond capital gains, no separate trading fees, and easy secondary market transactions. Various brokerages like Charles Schwab, Fidelity Investments, and Vanguard exist, with Fidelity being the chosen platform for its familiarity and recommendations.

To get started, visit the Fidelity website (https://www.fidelity.com/) and click on “Open an account.”

And click on the Cash Management Account. Traditional IRA and Roth IRA accounts are scheduled to be created later, with differences to be discussed in the next post.

Since it’s the first setup, click No and then click Next.

Fill in personal information. It’s worth mentioning again that U.S. brokerage and IRA accounts can be opened and operated only by individuals residing in the U.S. who have earned income.

Specify the source of income. Since I am employed, I select Employed and provide company information. Other options like Self-employment or Freelancer are available in the category.

Check No for the relevant details and click Next.

Ownership is individual.

Then, a screen appears to verify if the information is correct before the final setup.

Click Open account

Congratulations, the CMA account setup is complete.

Next, you need to link the bank checking account and Fidelity CMA account. Click on Link a bank account and then Continue.

Complete the text verification.

Choose EFT for free transfers and, to avoid sharing information with third parties, click on Enter my bank information my own and then Continue.

Enter the routing and account numbers of the checking account.

Congratulations, the checking account is now linked.

From here on, Fidelity has all my information, so opening Traditional IRA and Roth IRA accounts is a straightforward process. Click on Traditional IRA account setup on the portal.

Proceed to the personal information entry screen, where since the information is already known, simply confirm and click Next.

Check if they are correct.

Traditional IRA account setup complete.

Link the account to the previously created CMA account.

Similarly, when creating a Roth IRA account, you’ll see three accounts on the portal’s left side.

The checking account linkage verification takes 1-2 days, after which you can transfer funds.