Are Treasury Bills a Good Investment for Retirement Savings? (2024)

FAQs

Are Treasury bills good for retirement? ›

T-bills are one of the safest investments, but their returns are low compared to most other investments. When deciding if T-bills are a good fit for a retirement portfolio, opportunity cost and risk need to be considered. In general, T-bills may be appropriate for investors who are nearing or in retirement.

The biggest downside of investing in T-bills is that you're going to get a lower rate of return compared to other investments, such as certificates of deposit, money market mutual funds, corporate bonds, or stocks.

Cash and T-bills do offer an attractive yield, and they certainly play an important role in a financial plan. But we caution against holding too much cash in 2023. We'd point to three key reasons: Inflation—Whatever the prevailing market yields, over the long term, inflation tends to erode the purchasing power of cash.

High-yield savings accounts and Treasury bills (T-bills) are both good solutions for individuals who want a time-limited and fairly low-risk way to earn interest on their money. However, while the first is a savings account, the latter is a government security.

T-bills are more liquid than CDs but have about the same level of safety and maturity, so we would expect CDs to pay a higher rate to compensate for the difference in liquidity. However, this is not the case: In November 2022, a 12-month CD paid a rate of 0.6%, with 3- and 6-month CDs paying even less.

Treasury bills are debt obligations issued by the U.S. Department of the Treasury. T-bills have the shortest maturity date of all the debt issued by the federal government. You can purchase T-bills in $100 increments in non-competitive and competitive bids.

CDs offer a fixed rate for locking up your money for a fixed period of time, but you'll only earn the highest returns if you choose longer terms. Treasury bills are shorter term and depending on the term you choose, you could lock your money up for as little as a few days or as long as one year.

Treasury bonds are considered risk-free assets, meaning there is no risk that the investor will lose their principal. In other words, investors that hold the bond until maturity are guaranteed their principal or initial investment.

Basic Info

3 Month Treasury Bill Rate is at 4.87%, compared to 4.89% the previous market day and 0.38% last year.

Is Investing in US Treasury bills (T-bills) safe? US Treasury bills (T-bills) are considered to be a safe and low-risk investment because they are issued by the United States government and backed by its full faith and credit.

What are the pros and cons of Treasury bills? ›

The values shown are daily data published by the Federal Reserve Board based on the average yield of a range of Treasury securities, all adjusted to the equivalent of a one-year maturity. The current 1 year treasury yield as of March 09, 2023 is 5.18%.

Like other debt instruments issued by the U.S. Treasury, T-bills are considered a safe-haven investment, known for producing reliable returns even in times of economic declines.

Treasury Bills (or T-Bills for short) are a short-term financial instrument that is issued by the US Treasury with maturity periods ranging from a few days up to 52 weeks (one year). They are considered among the safest investments since they are backed by the full faith and credit of the United States Government.