Money Law & Treasury bills good for earning interest

By Erin Bendig

Savings rates have continued to go up this year, so if you’ve been looking for a place to store your savings and earn interest in the short term, you’ve probably considered a high-yield savings account or CD. And while these are both good options, there’s another short-term investment alternative you should also consider: Treasury bills.

Treasury bills (T-bills) have maturity dates of less than a year. While longer-term Treasuries typically pay higher yields, shortterm Treasury yields are currently higher.

As this paper goes to press, the 3-month Treasury bill rate is 4.97%, while the 30year Treasury rate is 3.78%. So, if you’re looking for a risk-free way to earn interest on your cash over a short period, investing in a T-bill could be a good choice.

Treasury bills are good investments for individuals looking to make a large purchase in a short timeline, as the money will only be tied-up for at most a year.

Although T-bills don’t typically earn as much as other securities, or in some cases CDs, they still offer higher returns than traditional savings accounts.

Plus, they’re one of the safest places you can save your money, making them a great fit for conservative investors who want to avoid risk-taking but still want to earn interest.

How to buy a Treasury bill

You can buy a Treasury bill through a broker, or directly from the government through TreasuryDirect.gov. The minimum purchase is $100.

To start an account with TreasuryDirect, you’ll need to provide a U.S. address, Social Security number and a bank account. Afterward, since T-bills are sold on auction, those looking to invest will need to place a bid. Once it’s accepted, it will arrive in your TreasuryDirect account.

If using a brokerage account, T-bills can also be bought through ETFs and mutual funds.

If you’re looking to buy a T-bill for your IRA, you’ll need to go through a broker, as you cannot do so on TreasuryDirect.

How a Treasury bill works

A T-bill is a short-term debt obligation backed by the U.S. Treasury Department. It’s one of the safest places you can save your cash, as it’s backed by the full faith and credit of the U.S. government.

T-bills are auctioned off at a discount and then redeemed at maturity for the full amount. “Interest” on T-bills is the difference between how much you pay for it and how much value you get when the bill matures. The most common maturity dates for T-Bills are four, eight, 13, 26 and 52 weeks.

In addition to Treasury bills, there are

See TREASURY BILLS, page 15 f gyg driven discussion i fo o you! vent or emai yoour questions Village Director of Mar eting R frreshments will be served. a g T visit bit lyy/ RV V E

Dav v is at 301-388- s f Ask the expert during thi fr r in advance to Brooke e Grove Tooni Davis at tdavvis@bgf..or Maasks required.

M

EricStewart by June 6