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How to buy Treasury Bills for Short Term Investing

January 31st, 2006

How to buy Treasury Bills for Short Term Investing

US Treasury Building

With the rising interest rates it might be a good time to look at Treasury Bills.  Currently the Treasury is paying approximately 4.3 Ė 4.5 percent interest rate.  Treasuries Bills are a short term government backed securities and are considered one of the safest investments.  You bid on Treasury Bills at a lower price and in a short time period the government will pay the fixed amount when it is due.

The minimum investment is $1,000 with increments of up to $1 million at a time.  You set up an account either through your bank or directly with the US Treasury.  Generally speaking, the shorter the term of the Treasury Bills the safer the investment tends to be.  If you are looking for a longer term investments the Treasury offers other products such as bonds.

 

T-bills are good for short term investing.  Returns are usually higher on the short term versus the long term.  On Mondays and Tuesdays of each week, the Treasury auctions T-bills.  If a holiday falls on one of these days, then the auction does not occur.  The auction sale prices determine what the term interest rate will be.   

If you buy direct with the treasury you can purchase 4, 13, and 26 Week Treasury Bills.  Setting up an account directly with the Treasury is a smart move.  They do not charge any fees to buy and sell the products that they offer.  They only charge is a $25 yearly fee for those who have over $100,000 in an account.  You can have the T-bill roll-over to the next term as well.

 

Besides the T-bills, the US Treasury offers Treasury notes, TIPS, and Bonds.  All have different durations in time and payoffs.  Having this as part of your investment portfolio is a good idea, because you donít want to put all your money in risky investments.  It is a good idea to have a diverse selection in your investment.

 
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By Nicole Wilson
Best Syndication Staff Writer

 

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Copyright 2005 Best Syndication                                     Last Updated Saturday, July 10, 2010 09:49 PM