Basics of Treasury Bills
Written by
Chris Chisholm
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Are you looking for ways to invest safely? You are not alone. The stock market has taken a serious beating in the last year, losing trillions of dollars in assets. Many people have seen their life savings practically wiped as their 401(k)s and IRAs shrivel down by about half. So the stock market, might not be the place for cautious investors to put their money. Instead, many people are thinking about putting their money into Treasury bills. Treasury bills are backed by the government and so are considered to be one of the safest investment options available.
When you invest in Treasury bills, you’re buying money market securities offered by the federal government. (Of course, similar securities are offered by many different countries, not just the United States.) They come with a maturity date that is considered to be short-term: either 3-month, 6-month, or one year. People invest in them because you pay less than they are marketed for. This means that when the Treasury bill (or T-bill as they are commonly called) matures, they mature at a higher value than what you paid for, and the government then pays you the difference – which is your profit.
Treasury bills are sold in smaller amounts than many other privately offered securities in order to let more people buy them. So, if you’re an investor with less than $10,000 to work with, you can buy T-bills. In fact, Treasury bills can sell from as low as $1,000, making them extremely accessible. Another reason people invest in T-bills is because they are taxed differently than other securities.
To learn more about Treasury bills and other investment products, be sure to consult with a financial advisor.
