Do You Crave Safety?

According to Maslow’s Hierarchy of Needs people crave food, water, shelter and warmth followed by security, stability, and freedom from fear.[1]   Scrolling through Facebook it appears people also crave selfies.

The ultimate in safety for an investor is the United States Treasury Bill.  In fact, dating back to 1926 the T-Bill has never lost money.  The T-Bill requires a $10,000 minimum investment and matures in one year or less.  It’s also 100% guaranteed regardless of how much money you invest.

A T-Bill can play a major role in your investment portfolio by giving your account safety and liquidity. Here are some ideas of how the T-Bill can help you with your investments.

  • Invest your money in a T-Bill If it’s earmarked for something. My daughter is in college and I keep two years’ worth of tuition payments in treasuries because I can’t afford to lose this money.
  • If you carry a high level of cash in your investment accounts, invest in a T-Bill as a cash alternative. It’s likely the T-Bills will provide you with a higher interest rate than your cash or money market account.
  • If you’re a house flipper or real estate investor, you can use T-Bills as a bridge between projects. The T-Bills will also give you liquidity if you need to purchase a piece of property quickly.
  • Business owners take considerable risk in running their company and may not want to take risks with their investments. The treasury market can be used to hedge or offset this risk.  My grandfather ran a successful business for years and was reluctant to buy stocks because of their short-term uncertainty.  He kept his money invested in cash, municipal bonds and U.S. Treasuries so he could access his money to buy equipment or real estate.
  • T-Bills are a hedge against a stock market correction. If you’re concerned about a falling stock market, then invest in T-Bills because they’re negatively correlated to stocks.  If one is rising, the other is falling.  A T-Bill is the best investment you can own when stocks drop.

T-Bills can be purchased from your advisor, broker or banker.   You can also set up an account at Treasury Direct to purchase them directly from the government.  Their web address is

It may sound like the T-Bill is the perfect investment but they do have some downsides.  The rate of interest is extremely low due to their high level of safety.  The T-Bill is a short-term investment and will not grow over time.  To grow your investments, you need to own stocks especially if your time horizon is longer than three years.

For short term safety, consider the T-Bill!



[1], By Christine Camaford, 1/8/2014

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