Treasury Bills vs Treasury Bonds – What’s the Difference?
Part 5/15: A Beginner’s Guide to Investing in Treasury Bonds & Bills
Treasury Bills (T-Bills) and Treasury Bonds (T-Bonds) are both government-backed investments, but they serve different purposes. Let’s break down the key differences so you can choose what suits you best.
Investment Duration
T-Bills – Short-term (3 months to 1 year)
T-Bonds – Long-term (2 years to 15 years)
If you need quick returns, go for T-Bills. If you're in for the long haul, T-Bonds are better.
How You Earn Money
T-Bills – You buy at a discount and get the full value at maturity (no interest payments).
T-Bonds – You earn interest (coupon payments) every six months until maturity.
If you want to avoid reinvestment risk, go for T-Bills. If you're okay reinvesting interest along the way, T-Bonds work better.
Risk & Return
T-Bonds generally offer higher returns because they lock in your money longer.
T-Bills are lower risk because they mature quickly.
Which One is Right for You?
Want quick returns with lower risk? Choose Treasury Bills.
Want steady income and higher returns over time? Choose Treasury Bonds.
Want both short-term and long-term benefits? Invest in both!
Now that you know the difference, let’s dive into how to buy a bond at a treasury auction in the next article!
This is part of the series A Beginner’s Guide to Investing in Treasury Bills and Bonds.
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