Table of Contents
Investors often compare different types of government securities to determine the best options for their financial goals. Treasury bills, bonds, and notes are common instruments issued by the government, each with distinct features and purposes.
Treasury Bills
Treasury bills, or T-bills, are short-term securities with maturities of one year or less. They are sold at a discount and do not pay periodic interest. Instead, investors receive the face value at maturity, earning the difference.
Treasury Bonds
Treasury bonds are long-term securities with maturities of 20 or 30 years. They pay fixed interest every six months and return the principal amount at maturity. Bonds are suitable for investors seeking steady income over a long period.
Treasury Notes
Treasury notes, or T-notes, have medium-term maturities ranging from 2 to 10 years. They pay fixed interest twice a year and are often used by investors looking for a balance between short-term and long-term securities.
Comparison Summary
- Maturity: T-bills (up to 1 year), T-notes (2-10 years), T-bonds (20-30 years)
- Interest Payments: T-bills (none), T-notes and bonds (semi-annual)
- Pricing: T-bills sold at a discount, T-notes and bonds at face value with interest
- Investment Purpose: Short-term cash management, medium-term income, long-term growth