How to Buy Treasury Bills Direct and Grow Your Wealth

Buying Treasury Bills Direct can be a straightforward process if you know where to start. You can buy Treasury Bills directly from the government's website, eTreasury.

To get started, you'll need to register for an eTreasury account, which is free and takes just a few minutes to complete. This will give you access to the Treasury Bills on offer.

Once you're registered, you can browse the available Treasury Bills, including the term, interest rate, and face value. You can then select the ones you want to buy and proceed to the checkout.

Treasury bills, or T-bills for short, are a great way to take advantage of rising interest rates. They're essentially IOUs issued by the government that are backed by the government's full taxing power.

T-bills come in three flavors: bills, notes, and bonds. They mature in one year or less, and most people use them for short-term savings.

You can get T-bills with terms ranging from four to 52 weeks.

Treasury bills, or T-bills for short, are short-term securities issued by the federal government that are backed by the government's full taxing power.

They come in three flavors: bills, notes, and bonds, but we're going to concentrate on T-bills because those are what most people use for short-term savings.

A T-bill matures in one year or less, giving you a relatively short time frame to get your money back.

T-bills have terms ranging from four to 52 weeks, making them a flexible option for short-term investments.

The government sells all its securities by auction, taking the lowest bids first, and most of the bidders are large financial institutions.

Most individual investors choose to make a noncompetitive bid, in which they simply get the average yield set at auction.

If you make a noncompetitive bid, you're guaranteed to get the amount of T-bills you ask for.

You can buy T-bills using TreasuryDirect, a free government website for buying Treasury securities without a broker.

You can buy T-bills in electronic form, either from a brokerage firm or directly from the government at TreasuryDirect.gov.

T-bills are sold at a discount to their face value, and your interest is the difference between what you paid and the T-bill's face value.

The most common maturity dates for T-bills are four weeks, eight weeks, 13 weeks, 26 weeks, and 52 weeks.

You can buy newly issued Treasuries of various durations through your bank or brokerage, which may charge a commission, or you can buy them commission-free online for as little as $100 through the government's TreasuryDirect program.

The minimum purchase for newly issued T-bills is $100, and the securities are sold in increments of $100.

T-bills don't pay interest in the same way as other Treasurys; instead, you buy the bills at a discounted price and hold them until the end of the term.

The government sells all its securities by auction, taking the lowest bids first, but most individual investors choose to make a noncompetitive bid, in which they simply get the average yield set at auction.

To buy Treasury bills direct, you'll need to open a TreasuryDirect account. This can be done online at TreasuryDirect.gov.

You'll need to provide personal information, including your Social Security number or taxpayer identification number, a U.S. address, and a checking or savings account to link for payment.

The TreasuryDirect website isn't fancy, but it's free and easy to use. To start an account, go to TreasuryDirect.gov and click on Open a New Account on the right-hand side.

You'll need to choose the type of account you're opening, such as individual, business, or estate and trust. Once you've made your choice, click Submit.

You'll then need to fill out your personal information, including your name, address, Social Security number, phone, and email, as well as your bank information. Review the information carefully to ensure it's accurate.

After submitting your information, you'll receive an email from the U.S. Treasury with a one-time passcode. Enter the passcode when prompted, and you'll be granted access to your new account.

To make purchases, simply hit the BuyDirect button and follow the prompts. You can only buy on auction dates, which occur regularly, and noncompetitive bids must be received before 11 a.m. on auction day.

Here are the steps to buy Treasury bills direct:

The interest rate on four-week bills, as of December 16, 2024, is 4.24%. This rate is 1.02% below last year's rate of 5.26% as of August 25, 2023.

Investing in Treasury bills has its advantages and disadvantages. Here are some key points to consider.

One major benefit of T-bills is that the U.S. Treasury guarantees interest and principal will be paid on time and in full.

T-bills are also highly liquid, meaning you can easily sell them at any time before they reach maturity.

Another perk is that interest earned on T-bills isn't taxed at the state and local levels, but it is taxed as federal income.

However, there's also a risk of reinvestment risk when a T-bill matures, creating a situation where you may end up making less than you planned.

T-bills have a relatively short maturity period of 365 days or less, so if interest rates drop, you can't wait for them to rebound before withdrawing.

T-bills typically offer lower interest rates than other fixed-income options, but they currently yield more than Treasury notes and bonds, reflecting investor concerns about future economic slowdowns.

Here's a quick summary of the pros and cons of investing in T-bills:

Treasury bills are short-term U.S. debt securities issued by the federal government that mature in four weeks to one year. They are considered virtually risk-free if held for the entire term.

You can purchase T-bills online from the Treasury Department, a brokerage, or a bank, and they are typically sold in $100 increments.

T-bills work differently than longer-term fixed-income investments, which pay interest semiannually until maturity. You buy T-bills at a discount from the face value, and your interest is the difference between the discounted price and the par value at maturity.

Here's a breakdown of the most common maturity dates for newly issued T-bills: four weeks, eight weeks, 13 weeks, 26 weeks, and 52 weeks.

A Treasury bill, or T-bill, is a short-term U.S. debt security issued by the federal government that matures in just four weeks to one year.

T-bills are virtually risk-free if held for the entire term because the U.S. government backs them.

They're typically sold in $100 increments, making them a convenient investment option.

You can purchase T-bills online from the Treasury Department, a brokerage, or a bank.

T-bills are issued at a discount from the par value, meaning the purchase price is less than the face value of the bill. This is a key characteristic of T-bills.

The difference between the face value and the purchase price is the interest earned for the investor. For example, if you buy a $1,000 T-bill for $950, you'll earn $50 in interest when it matures.

T-bills don't offer regular interest payments as with a coupon bond, but a T-bill does include built-in interest, reflected in the amount it pays when it matures. This built-in interest is a result of the discount at which the T-bill is issued.

The interest income from T-bills is exempt from state and local income taxes, but it is subject to federal income tax.

Here's a breakdown of the interest earned on a T-bill:

As you can see, the interest earned on a T-bill is the difference between the face value and the purchase price.

Treasury bills, notes, and bonds are three types of U.S. debt securities that mainly differ in the length of maturity, with Treasury bills being the shortest.

Treasury notes mature in two, three, five, seven, and 10 years, while Treasury bonds mature in 20 or 30 years.

Treasury bills are sold at a discount rate to their face value, and the "interest" you receive is the difference between the face value of the bill and its discount rate when it matures.

Treasury notes and Treasury bonds pay interest every six months, but Treasury bills don't pay a fixed interest rate.

Economic growth or decline, interest rates, and inflation can all affect Treasury bill rates.

Treasury bills, or T-bills, are a type of investment that can be a bit confusing, especially for those new to the world of finance. One of the key things to understand about T-bills is that they don't pay a fixed interest rate, unlike some other types of investments.

The interest you receive from a T-bill is actually the difference between the face value of the bill and its discount rate when it matures. This is because T-bills are sold at a discount rate to their face value, and the "interest" you receive is the difference between the two.

T-bills are also affected by economic growth or decline, interest rates, and inflation. The Federal Reserve's monetary policy and the federal funds rate, in particular, can impact T-bill yields.

Here are some key terms to understand when it comes to T-bills and bonds:

Understanding these key terms can help you navigate the world of T-bills and bonds and make informed investment decisions.

Treasury bills are a low-risk investment option, making them suitable for investors who want to preserve their capital.

To maximize returns, investors can consider a laddered investment strategy, where they invest in treasury bills of different maturities to spread risk.

This approach allows investors to take advantage of higher yields offered by longer-term bills while minimizing the risk of holding a single, long-term investment.

Investors can also consider reinvesting their returns to compound their interest and increase their overall returns.

You can avoid yield regret by using a strategy called laddering, especially if you think interest rates will keep rising. Powell has indicated that he will continue to raise interest rates to squash inflation.

To use laddering, invest a portion of your money at regular intervals, rather than all at once. For example, suppose you have $1,000 you want to invest in T-bills.

Take $250 and invest it in a one-year T-bill at the next auction date. This will give you a chance to catch any rise in rates with your next purchase. Did rates keep rising after your first purchase? You would have caught the rise with the next purchase.

Invest the entire $1,000 in three-month T-bills. Every three months, reinvest $250 of the three-month bills into a one-year bill. This way, you'll have four one-year T-bills, with one maturing every three months.

Currently, the one-month T-bill is the highest-yielding investment among bills, notes, and bonds. This is not normal, as typically the longer you tie up your money, the higher the yield.

You can use the laddering strategy for bank CDs, but banks currently aren't offering one-year CDs with rates as high as a one-year T-bill.

If you're looking to invest in the bond market, there are several ETFs to consider. Here are the top 5 Treasury ETFs by assets under management (AUM), according to VettaFi.

The iShares 20+ Year Treasury Bond ETF (TLT) has the largest AUM, with $57,182 in assets under management.

The top 5 Treasury ETFs by AUM are:

These ETFs offer a low-risk investment option, allowing you to diversify your portfolio and potentially earn returns through interest on government bonds.