Short Term Treasury Bills
Hi Terry,
I have been listening to and studying your info on T-bills but am afraid/leery of investing on my own, especially online, because I am fearful of not understanding everything. The guide online does seem easy enough, though. I saw in one of your answers to a fan’s question about the “auction” and you mentioned that the full amount of your $10,000 deposit will not be taken from your account and the interest is paid up front… ?? Yikes.. How do I invest confidently and comfortably? Thank you so much. I would like to make a larger one-time investment in this short term bill. We here at home enjoy learning from you.
PS I guess I could go to a bank and get this information?
Thank you again.
Terry Says
NO, you can’t get that info from a bank! They don’t buy treasury bills in your account and will talk you into a lower-yielding money market fund.
Now, this isn’t too complicated for you to understand.
Go to www.TreasuryDirect.gov and start reading about Treasury bills. It is very clear.
There is a weekly auction of billions of dollars of t-bills. Big financial institutions, domestic and foreign, bid on them, setting the interest rate.
Ordinary people “get” that same rate.
You have placed an order on TreasuryDirect (from $100 to $100,000!) and agree to accept that interest rate.
The money is withdrawn from your checking account to pay for them.
But if you bought $1,000 of tbills, they only withdraw about $9700. In effect, you get that money up front. I
At maturity, the full $1,000 is deposited back into your bank account—unless you have chosen an automatic rollover to whatever rate is in effect the following week.
I’m repeating this because YOU CAN DO IT – and you should do it to get the highest yields these days, with the ultimate safety of the U.S. Government!
