Investing in Treasury-Bills

Are you familiar with Treasury Bills?

Treasury bills, or T-Bills, are short-term debt obligations issued and backed by the government. They are simply loans made to the U.S. government. Warren Buffett is chairman and CEO of Berkshire Hathaway. At the end of the second quarter of 2024, Berkshire Hathaway held $235 billion in short-term investments in Treasury bills. Last May, Buffett called them “the safest investment there is.” Elon Musk describes short-term T-bills as a “no-brainer.” They’re a safe place to hold extra cash. Now, that’s good, since both men have a lot of cash to store!

T-bills come in short-term lengths from 4 to 52 weeks. They’re auctioned off at a discount of face value, they’re redeemed for the full amount at maturity. Earnings equal the difference in maturity and purchase price. Like CDs, they can be redeemed at maturity or reinvested. T-bills can be purchased electronically from the Treasury, a bank, a broker, or other financial institutions. The government and large firms offer them with zero commission, and returns are proportional to the length of the bill. Though earnings are subject to federal income taxes, they’re exempt at the state and local levels. That’s a benefit for those living in states that tax income. The Bible instructs us to diversify our investments. Solomon wrote in Ecclesiastes 11:2, “Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land.”

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