Treasury Bills (T-Bills)

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Treasury Bills (T-Bills) are short-term U.S. government debt securities issued by the U.S. Department of the Treasury. They’re considered one of the safest investments in the world, since they’re backed by the full faith and credit of the U.S. government.

🏦 How Treasury Bills Work

T-Bills are sold at a discount to their face value, and you earn interest when they mature — not through regular interest payments.

🔁 Example:

You buy a $1,000 T-Bill with a 6-month term at a discounted price of $975

At maturity (in 6 months), the government pays you $1,000

You earn $25 in interest

👉 This means your effective yield is about 5.13% annually

🔍 Key Features of T-Bills

Feature Description

Maturity Terms 4, 8, 13, 17, 26, or 52 weeks

Purchase Price Sold at discount (below face value)

Minimum Investment $100 (in increments of $100)

Interest No periodic payments — just the difference at maturity

Taxation Exempt from state & local taxes, taxable at federal level

Risk Level Virtually zero risk — backed by U.S. government

🛒 Where to Buy T-Bills

TreasuryDirect.gov

 (direct from the U.S. Treasury)

Brokerage accounts (Fidelity, Schwab, Vanguard, etc.)

Money market funds that invest in T-Bills

🧠 Why Investors Buy T-Bills

Safe place to park cash with higher yield than savings accounts

Useful for short-term goals or emergency funds

Hedge during market volatility or rising interest rate environments

Good for laddering strategies (staggered maturities)

📈 Real-World Example (2025):

6-month T-Bill yield: 5.25%

You invest $10,000

Buy at $9,737.50

Get $10,000 at maturity

Earn $262.50 interest in 6 months