I'm trying to understand what return I'll get on 1 month treasury bills. I want to invest in something that has minimal risk, minimal management, and flexibility to get my money out.

I'm looking at this "daily treasury yield curve rates" page:


Say the rate at time of purchase is 0.2%, and I want to buy a $10,000 bill. I believe the actual purchase price would be $9,980, and at the end of the month, I would get back $10,000. This would be a profit of $20 (minus federal taxes). Is that how it works?

I'm reading that short term bills are rarely worth it, but $20 a month is way more than I'd get with the same amount in a savings account at current interest rates.

I'm not sure I'm interpreting this correctly.


  • Is the $1.50 or so really worth it? Per brick's answer, that's what you'll get in a month. Apr 16, 2016 at 16:58
  • Yeah I thought they were publishing the return for the time period of the bill, silly me. Apr 16, 2016 at 20:33
  • Joe, we lose a lot of potential income when we are paranoid about the safety of our investment. Still, the 'risk free' rate of return is usually defined by the yeald on the S&P 500, which we can get by purchasing SPY. here is the link to where you can find out the yeald on SPY Apr 17, 2016 at 10:03
  • 2
    @JackSwayzeSr The S&P500 yield is most definitely not the risk free rate: you may get more or less than the published yield over any given investment period. See, e.g., investopedia, including "Thus, the interest rate on a three-month U.S. Treasury bill is often used as the risk-free rate."
    – user27684
    Apr 17, 2016 at 17:14

1 Answer 1


You've got the right idea, except that the stated interest rate is normalized for a 1-year investment. Hence if you buy a 4-week bill, you're getting something closer to 4/52 of what you've computed in your question. More precisely, the Treasury uses a 360 day year for these calculations, so you multiply the stated rate by (number of days until maturity)/360 to get the actual rate of return.

  • Ah ok, I didn't realize that it was the return for an entire year, that is much worse. Apr 16, 2016 at 20:31
  • By the way, I do not think you can purchase 1 month bills. You can buy 4 week bills, however. I have actually purchased 4 week bills. The Treasury took 24.98 out of my checking account then exactly 4 weeks later deposited 25.00 into my account. But if you want an investment that you can redeem at any time look into purchasing a Treasury Note. You will get a better rate and can sell the note on the secondary market at any time Apr 17, 2016 at 9:56
  • @JackSwayzeSr+ T-bills (up to 1 year) are just as 'marketable' (tradable on secondary market) as notes (up to 10 years) and bonds -- perhaps more so, because money market funds and some other 'cash-like' holdings are usually required to invest in low-risk debt securities with short maturity, a perfect match for T-bills. But neither can be done in TreasuryDirect; you have to transfer out to a broker, or buy through a broker in the first place. Mar 1, 2018 at 3:41

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