How does one usually buy Treasury Bills? I see there is both the Treasury website and secondary markets. Apparently, the rates are different in each? I‘m a total newbie here, so could someone walk me through the process? Also, are there any newbie mistakes/risks I need to watch out for?
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3Which treasury? Every country has their own– littleadvCommented Feb 16, 2023 at 3:11
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Sorry, fixed it– desert_rangerCommented Feb 16, 2023 at 8:33
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2 Answers
If you want to but directly from the US government then you can go to the Treasury Direct site.
About TreasuryDirect
TreasuryDirect.gov is the one and only place to electronically buy and redeem U.S. Savings Bonds. We also offer electronic sales and auctions of other U.S.-backed investments to the general public, financial professionals, and state and local governments.
Notice the word redeem. That covers the selling of savings bonds but the site does more than that:
Individuals
Anyone can use this site to learn about savings bonds and other investments available for purchase. To make a purchase and manage them, open a TreasuryDirect account.
TreasuryDirect accounts offer Series I and EE Savings Bonds, Treasury Bills, Notes, Bonds, Inflation-Protected Securities (TIPS), and Floating Rate Notes, all in electronic form, and all in one convenient account.
Those Bills, notes, and bonds cover investment periods from weeks to decades.
There is a FAQ to answer many of your questions.
How can I sell my Treasury security before maturity?
If you hold your security in TreasuryDirect you can transfer it to an account in the Commercial Book-Entry System. If you hold your security in the Commercial Book-Entry System, contact your broker, dealer, or financial institution or investment advisor. Normally there is a fee for this service.
Some brokers allow you to buy and sell t-bills and the like, you need to research their fees.
Regarding newbie hints. You need an account on treasury direct. You tell the site where the funds will be pulled from. Some durations are auctioned every week. The site has the schedule.
Lets say you want 4 week T-bills, those are auctioned every week. You tell the site how much to buy in $100 increments, the treasury direct site will pull the proper amount based on the auction results. if you want to buy $1000 in 4 week t-bills they will take out a little less than that so that 4 weeks later they will return $1000 to your bank account. You can even decide to automatically reinvest at the new rate 4 weeks later.
answered Feb 16, 2023 at 11:20
TreasuryDirect is for instruments which you want to purchase “new” (not on the secondary market) and hold until maturity.
(You can sell instruments held at TD before maturity, but requires jumping through hoops.)
The secondary market (which you access via a broker) is for buying “existing” instruments (for example a 10 year note that matures 3 years from now.
