Treasury Bills

Treasury Bills (T-Bills) are short-term government securities issued by the U.S. Department of the Treasury. They are considered one of the safest investments available.

T-Bills are typically issued with maturities of less than one year, commonly 4 weeks (28 days), 13 weeks (91 days), 26 weeks (182 days), and 52 weeks (364 days). They are sold at a discount from their face value and do not pay periodic interest payments. Instead, investors earn a return by purchasing the T-Bill at a discount and receiving the full face value at maturity.

For example, if an investor purchases a $1,000 T-Bill at a discount price of $980, they will receive the full $1,000 at maturity, resulting in a $20 return. The return is equivalent to the interest earned on the investment.

T-Bills are considered low-risk investments because they are backed by the full faith and credit of the U.S. government. The U.S. Treasury is considered one of the most creditworthy borrowers globally, making T-Bills a highly secure investment option.

T-Bills are highly liquid, meaning they can be easily bought and sold in the secondary market. They are also exempt from state and local taxes, making them attractive to investors seeking tax advantages.

Investors often choose T-Bills for various reasons. They provide a safe haven for capital preservation, diversification, and short-term cash management. T-Bills are also used as a benchmark for other short-term interest rates and can serve as a reference point for pricing other financial instruments.

In summary, Treasury Bills (T-Bills) are short-term government securities issued by the U.S. Department of the Treasury. They are sold at a discount and do not pay periodic interest payments. T-Bills are considered low-risk investments backed by the U.S. government and are highly liquid. They are popular among investors seeking capital preservation, diversification, and short-term cash management options.