How to buy Treasury
Bills for Short Term Investing
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.
Best Syndication Staff Writer
Books on Investing
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