U.S. Treasury bills

In your recent column, you stated that the safest short-term investment in the world is U.S. Treasury bills. How do you go about purchasing U.S. Treasury Bills?

Terry Says: Oh that’s easy — and there’s only one way.  Go  to www.TreasuryDirect.gov.  Click on “Individual” and then you will see a menu explaining Treasury bills, and how to purchase them.  It’s all done online,  and you can make a purchase in minimum amounts of $100 — up to millions!  You will have to set up an account with them, using your checking or MM account at a bank.  Then the purchases will be deducted from that account balance — and the interest you earn will automatically be deposited.

As you will see, you can purchase T-bills that mature in 90 days (3 months) or 180 days, or one year.  You can elect to have them automatically “rolled over” at maturity for up to 8 additional purchases.  Each time, the interest you earn will be deposited into your checking account.  Don’t plan to sell your T-bills before maturity.

You don’t know what the rate will be at the weekly auction of T-bills.  That is set at an “auction” where large institutional dealers commit to purchase large amounts of the billions of dollars in T-bills being auctioned every week.  As a small participant, you get whatever the average interest rate is that is set at the auction for that week.

Spend some time at the website, and you will learn everything you need to know!