Treasury bills and Treasury notes are an investment security issued by the U.S. government. A Treasury bill matures within one year and investors typically roll over the matured Treasury bill and purchase another Treasury bill the same day. Treasury notes have maturities of up to 10 years.
You are considering investing $50,000 in a Treasury bill that you will renew every 6 months or invest in a Treasury note that you will hold until maturity. Your investment timeframe is 9 years. Current interest rates are expected to increase. Would you invest in the Treasury bill or Treasury note? Discuss your reasoning.
My openion : I would like to invest in the in the Treasury notes.
Explaination for the above answer :
First of all let us understand the difference between both of them
Treasury bill : Treasury bills (or “T-bills”) are short term bonds that mature within one year. Treasury bills (or “T-bills”) are having maturities of four, 13, 26, and 52 weeks . Such one-, three-, and six-month bills are auctioned once a week, while the 52-week bills are auctioned every four weeks. Since the maturities on Treasury bills are so short, they typically offer lower yields than those available on Treasury notes
Treasury notes : Treasury notes which have a more distant maturity date and a higher yield. Such treasury notes s are issues with maturities of one, three, five, seven, and 10 years.
My conclusion : If I have $ 50,000 and considering investing either $50,000 in a Treasury bill that you will renew every 6 months or invest in a Treasury note that you will hold until maturity or investment timeframe is 9 years then I would like to opt T Notes because invested in a Treasury bill would have to be renewed frequently at lower yields. The growth of the principal would be in small increments. The same dollar amount invested in Treasury notes would yield higher returns over nine years. My veiw is confirm growth is in the Treasury note.
