Treasury Bills: What They Are and How They Fit in Your Portfolio

When you hear treasury bills, short-term IOUs issued by the U.S. government to raise money. Also known as T-bills, they’re one of the safest places to park cash because the U.S. has never missed a payment. Unlike stocks or corporate bonds, T-bills don’t pay interest upfront. Instead, you buy them at a discount and get paid face value when they mature—usually in 4, 13, 26, or 52 weeks. That difference between what you pay and what you get back is your return.

Treasury bills are a core part of fixed income, a category of investments that provide regular, predictable returns. They’re not flashy, but they’re the foundation of many portfolios, especially when you’re trying to reduce risk. If you’re holding stocks that swing wildly or bonds that might default, T-bills act like a shock absorber. They’re also used by institutions and individuals alike to hold cash that’s earning something—anything—above a regular savings account. And unlike money market funds, T-bills are backed by the full faith and credit of the U.S. government, making them the closest thing to a risk-free asset you can find.

They’re not just for retirees or cautious investors. Even aggressive investors use T-bills to time the market. If you’re waiting for a dip in stocks but don’t want to sit in cash earning nothing, buying T-bills lets you earn a little while you wait. They’re also used as collateral in trading and as a benchmark for other interest rates. When the Fed changes rates, T-bill yields move first—so they’re a leading indicator for the whole fixed income market.

You won’t find T-bills in your 401(k) unless you pick them yourself—they’re not automatic. But they’re easy to buy directly through TreasuryDirect.gov, or through your brokerage. No minimums, no fees, no credit checks. You can start with as little as $100. And because they mature quickly, you can roll them over without locking your money up for years like long-term bonds.

What makes T-bills different from government securities, a broader category that includes notes and bonds with longer terms? Notes and bonds pay interest every six months and last 2 to 30 years. T-bills? No coupons, no hassle, just pure simplicity. That’s why they’re the go-to for anyone who wants safety, liquidity, and a tiny bit of yield without the noise.

Looking at the posts below, you’ll see how T-bills connect to emergency funds, diversification, and even how AI tracks interest rate shifts. Some articles talk about when to shift from stocks to safer assets. Others show how to balance risk across your entire portfolio. Whether you’re just starting out or you’ve been investing for years, T-bills are one of those tools that never go out of style—and they’re always worth understanding.