How to Invest in Short-Term Treasury Bonds

Against the backdrop of market volatility and the Federal Reserve ratcheting up interest rates to battle inflation, short-term bonds hold a lot of investor appeal today. In the past year, short term rates have gone up by nearly 4%!

If an investor is looking for a conservative investment that will not expose you to as much volatility, short-term bonds may be a good option. When compared to bonds with longer maturity, short-term bonds can help hedge against interest rate risk and now actually pay a very competitive yield. Furthermore, in times where interest rates are rising holding individual bonds to maturity serve as a further buffer.

How do short-term Treasury bonds work?

Extremely short-term Treasury bonds, which mature in one year or less, are also known as Treasury bills or T-bills. They do not pay any interest during the life of the bond. Instead, they are sold at a discount of their face value. Upon maturity, the owner can cash in the bond for its full-face value.

How do you purchase short-term bonds?

There are two common ways to buy individual Treasury securities:

• Treasury Direct, the official U.S. Department of the Treasury website for managing Treasury bonds, or

• Through a brokerage account , online or in person.

Who should consider looking at this?

• Institutions that have excess savings or working capital that will not be used in the near future

• Emergency funds or long-terms savings

• Short term portion of existing fixed income allocation

*Past performance does not guarantee future results. The information contained is not official financial advice. If you are interested in adding some stability to your investment portfolio Contact Elevation today to discuss if short-term treasury bonds may be right for you.