A Treasury bill (or T-bill) is a short-term debt security issued by the US Government with a maturity period ranging from four weeks to one year. T-bills are purchased for a discount (less than $100) and pay out their par value ($100) at maturity - the difference is your interest. This interest is subject to federal taxes, but exempt from state or local taxes. For example, let's say a $1,000 T-bill was sold at a discounted price of $950. Then the T-bill reaches maturity, the investor is paid $1,000—the face value of the T-bill—resulting in a $50 return. Because T-bills are backed by the full faith and credit of the US Government, they are considered one of the safest assets for an investor’s portfolio.
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Investments in T-bills: Not FDIC Insured; No Bank Guarantee; May Lose Value.
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