How to buy a Treasury bill
In the July 2 business section of the L.A. Times there was an article
on a 5.23 percent yield on a six-month Treasury bill. How does one
go about purchasing a Treasury bill?
-- James G.
The Treasury auctions three Treasury bills every week: a 28-day
T-bill, a 91-day T-bill and a 182-day T-bill. They are more commonly
known as one-month, three-month and six-month bills. Any Treasury
security with a final maturity of a year or less at issuance is
called a bill.
The Treasury will also issue short-term cash management
bills close to quarterly tax payment dates. The Treasury also issues
notes that range in maturity from one to 10 years and a Treasury
bond that has a final maturity of 30 years at issuance. The Treasury
also issues five-year, 10-year and 20-year maturities of Treasury
Inflation-Protected Securities, or TIPS.
You can buy Treasury securities from your stock broker,
or you can buy them directly from the government by setting up a
account. At this time TreasuryDirect doesn't allow you to establish
an IRA or other tax-advantaged retirement account, just individual
If you're buying through a brokerage firm it makes sense to discuss what commissions you'll pay when buying the securities. Paying $75 to buy a six-month T-bill with a $10,000 face value will bring that 5.23 percent yield down quite a bit.
Bankrate publishes the auction averages for the three- and six-month T-bills each week on its Treasury Rate Watch page. The bills are quoted as discount rates, and the bond-equivalent yields will be somewhat higher.
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