Everyone knows that you should save money for a rainy right, but the challenge everyone faces is that less than 4% of US households have 6-12 months worth of an emergency fund saved up. The obvious thing that everyone does is put away their savings into a savings bank account, but the interest you earn on your money if your lucky could be less than 1%. This is a terrible way to save your money. This is where T-Bills can come into play.
What are T-Bills?
These bills are backed up by the US Treasury Department. These are safe investments, they generate better returns on your investment, most importantly these are short-term investments; meaning you can get access to these funds if you need them.
This could help individuals and families create and build a strong solid emergency fund.
Okay, How do these T-Bills work?
These bills are offered by the US Treasury and are generally offered in short terms within about a 52 weeks time frame. This is a great strategy to get you where you need to be as long-term investments would not allow you to have access to your money when you need it. The treasury department sells these bills in different time frames, they are usually broken up in 13-weeks, 52-weeks, and 26-week terms. Generally, these bills are sold at auction. There are two types of bids you can place, a competitive bid or a non-competitive bid. The U.S. Treasury Department publishes a schedule of the T-bill weeks when they are up for bids.
What is a non-competitive bid?
This is a bid you accept for your T-Bill that is already determined at the time of auction.
Competitive Bids
You can send a competitive bid, but this process is a little bit more complicated, usually, banks, financial advisors, and other institutions perform these types of bids can be rejected if you bid higher than the discounted rate that is set at the time of auction.
Where can I buy these T-Bills?
You can go to the US Treasury Department website or you can sit down with a financial advisor to help you. Don’t expect to receive large R.O.I’s but their T-Bills will beat your bank's interest rate by at least 1% or a little higher.
I am interested in doing this but I don’t have a lot of money to invest
I have sat down with individuals and families from all walks of life when they express interest in investing and growing their money they are surprised that you can start with as little as $25 a month! But in this case, you can buy T-Bills for just $100. The U.S. Treasury Department sells these T-Bills in increments of $100 denominations.
Remember this type of investment will be classified as income, so keep this in mind when looking to participate in this strategy. The only difference here is that you won’t have to pay state and local taxes on these types of accounts.
T-Bills can be a solution to build your emergency fund
These types of products are safe and they are short term. You are protected by the federal government. You cannot lose your money because your principle is guaranteed even if you don’t make a return. I would not recommend putting all your emergency fund in a T-Bill, keep some in savings for access and strategically use some to buy T-Bills.
If you need help solidifying a strong financial plan for your self and your family I would be more than happy to sit down with you to put a customized plan for your future.
Rene Gonzales
Senior Representative
c. 512-568-7203
e. [email protected]
www.Primerica.com/ReneGonzales