Treasury Bonds vs. Treasury Notes vs. Treasury Bills
To navigate the world of U.S. Treasury securities, it’s crucial to understand the difference between Treasury Bonds, Treasury Notes, and Treasury Bills. These debt instruments vary in terms of maturity, interest payments, and investment purposes.
Basis |
Treasury Bills |
Treasury Notes |
Treasury Bonds |
---|---|---|---|
Maturity |
Short-term, with maturities ranging from a few days to one year. |
Intermediate-term, with maturities ranging from two to ten years. |
Long-term, typically exceeding ten years. |
Interest |
Sold at a discount, and the difference between the purchase price and face value represents the interest earned. No periodic interest payments: interest is earned at maturity. |
Pay fixed interest every six months. Sold at face value, providing regular interest income. |
Pay fixed interest every six months. Sold at face value, providing regular interest income. |
Purpose |
T-Bills are ideal for short-term investors seeking a safe and liquid investments without the need for regular interest income. |
Treasury Notes suit investors with a medium-term investment horizon who prefer a predictable stream of income through regular interest payments. |
Treasury Bonds are suitable for long-term investors looking for steady interest income over an extended period. |