What is a Treasury Bill?
Purchasing a Treasury bill is one of the safest ways to invest and secure your money. Treasury bills (T-Bills) are short-term debt obligations, with maturity periods up to a year, issued by both the U.S. and Canadian governments. You don’t actually receive a paper issued Treasury bill upon purchasing one. The purchase price is typically deducted from an online account, with the rate of return or interest for your investment, paid directly into your account upon maturity. Treasury bills are fully backed by the issuing U.S. and Canadian governments, and are extremely, liquid, making these attractive to both individual and corporate investors seeking a safe haven for their cash.
They’re pieces of paper with a monetary value, in principle something like paper money, but with a life of a year or less. They have a face value, i.e. they’re worth a certain amount in pounds sterling, but the Bank of England sells them for less than this value. Then when they mature and the buyer redeems them, they get paid the full face value. In this way the Bank of England doesn’t have to pay interest, but still persuades organisations (e.g. banks) to buy them off it. Instead of interest they offer a short-term capital gain. There’s a market in Treasury Bills so they can be bought and sold, not only via the Bank of England. Because they’re freely tradeable within this market, they’re almost as liquid as cash. They’re mostly held by financial organisations, e.g. banks. Because the government is bound to redeem them, they’re regarded as very low risk investments.
Everybody wants to make as much money as they possibly can, in order to feel secure in the face of life’s challenges. We also like to have money because it broadens our range of choices where we can shop, where we can go, what we can do. To that end, many people turn to investing as a way to make long-term strides towards their goal of financial freedom and security. One investment option, oftentimes referred to as a “vehicle,” because it carries your money where you want it to go, is a Treasury bill. Treasury bills are a form of debt obligation, short-term, that come from our very own United States government – they’re issued by the Department of the Treasury, hence their name. Treasury bills, also known as “t-bills,” must come to maturity within one year. “Maturity” in this sense means the date when they are ready to be given back to the investor. They come in several different amounts, from as low as $1,000 up to $5 million. They’re what’s known as “debt obligations,” and what you’r
