T-bills are one of the most popular types of investments that the market has to offer today. T-bills are securities that are considered to be part of the money market. Here are the basics of T-bills and how they can be beneficial to investors.

What are T-Bills?

The term T-bill is short for Treasury Bill. This is a type of security that is offered by the United States Treasury. This is a short-term debt instrument that is basically a bond. The government issues these T-bills as a way to raise money for short-term purposes.

Maturities

T-bills are offered with a number of different maturity lengths. This makes them suitable for many different types of investors. You can purchase T-bills with maturities of 3 months, 6 months, and 1 year. 

Values

Whenever you purchase a T-bill, you are going to purchase it for less than the face value. Every T-bill carries with it a face value that is assigned by the United States Treasury. You will then hold the T-bill until it matures and you can redeem it with the United States Treasury. For example, if you purchased a T-bill for $980, you will be able to turn it in for the face value of $1000 when it matures. You would make $20 in profit with this type of transaction. This type of payment structure varies from traditional bonds. With other types of bonds, you will receive a regular interest payment and eventually you will be able to get your initial investment back. With T-bills, you are simply going to purchase the securities at a discount and then get full face value later on.

Purchasing

In order to purchase a T-bill, you are going to have to go through a bidding process. You can submit non-competitive as well as competitive bids directly to the United States Treasury. You will specify what type of a return that you would like to generate from the T-bills. If you do not win the bid, you may not be able to get anything from the treasury. In some cases, you will receive a partial acceptance of your bid. Purchasing T-bills is not quite as simple as buying a savings bond from the United States Treasury.

Sizes

One of the great things about this type of investment is that it is generally affordable for the masses. T-bills are available in smaller sizes such as $1000 and $5000. However, large investors will also be able to take advantage of this type of security with larger amounts as well. You can purchase these T-bills in increments of $10,000, $25,000, $50,000, $100,000, and even $1 million. This means that regardless of how much money you have to invest, you should be able to get involved in the T-bill market.

Safety

This is considered to be one of the safest types of investments around. You are basically investing directly into the United States government. Therefore, your investment is going to be safe as long as the country is intact.

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