Investing in Treasury bills (T-bills) can be a lucrative way to generate income and add to your portfolio. T-bills are short-term debt instruments issued by the U.S. government and are considered one of the safest investments available. You can purchase T-bills directly from the U.S. Treasury or from your online broker, but they often require a minimum purchase of $1,000. One benefit of buying T-bills is that you can hold them until maturity and not be subject to market fluctuations.
By the end of last year, Treasury bills (T-bills) sported a yield of over 4.5%, higher than other short-term investments such as money market accounts and certificates of deposit (CDs). This makes T-bills a desirable option for investors who want to earn higher returns without taking on too much risk. It is not possible to invest directly in an index, but investors can purchase mutual funds or exchange traded funds (ETFs) that track the performance of the Treasury bill index.
A 5% yield on Treasury bills pays investors to wait. This rate of return is especially attractive when compared to other short-term investments, such as money market accounts and CDs, which offer a much lower yield. Furthermore, passive funds and ETFs won’t completely supplant active managers, since investors are still looking for high returns, particularly with recent yields on short-term Treasury bills high.