The Ministry of Finance bills and bonds are low-risk government-supported debt securities.
Tom Tauri of Kiplinger’s personal finances
The federal government raises huge sums by issuing debt securities. Treasury debt and Treasury bills are two main varieties that buyers invest in.
They both have full faith and credibility support of the US government. This means investors have a rather low risk of non-payment of interest and loss of principal.
One of the greatest strengths of Treasury Securities is their tax profile. “All finances don’t contain salt,” says Judith A. Raneri, vice president and portfolio manager at Gabelli Funds LLC. “In other words, the interest earned is state and local tax-free. These securities are subject to federal tax only.”
Although both of these investments are government-supported debt securities, there are two major differences between the Ministry of Finance bill and financial obligations.
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Mainly, they vary when the principal is repaid and called security maturity, and how the interest is paid.
When will the Ministry of Finance bills and bonds mature?
The Treasury bill has six maturities: four weeks, eight weeks, 13 weeks, 17 weeks, 26 weeks and 52 weeks. This flexibility is an important advantage. This allows investors to better manage their short-term cash.
“Treasury invoices can be used as cash replacements in your portfolio,” said Sara Kalsman, certified financial planner at Betterment. “They provide relatively stable returns while preserving capital during a volatile market environment.”
Meanwhile, Treasury bonds have only two maturities. They’ve been 20 or 30 years.
To bypass long maturation, bonds can be sold before maturity (the same applies to Treasury bills). In fact, this is a common practice as each investor has its own portfolio goals and requirements.
Selling Treasury bonds results in capital gains or losses thanks to the inverse relationship between bond prices and interest rates. As interest rates rise, Treasury bond prices generally fall, and vice versa.
For example, let’s say you purchase 20-year Treasury debts at a fixed rate of 5% for $1,000. A year later, interest rates rose to 7%, but there was a problem if you wanted to sell.
Your bonds are not attractive to buyers as buyers can buy the same type of security for $1,000 and get a higher rate.
When selling bonds, you need to try to provide competitive yields, so to boost yields to 7%, you need to lower the security price to under $1,000.
As a result, you will lose your major investment.
When the prices are low, it’s the best time to sell. For example, if interest rates on the same 5% bond fell to 3%, the value of the bond would have increased.
In that case, if you sell bonds, you will have capital gains.
How is interest paid?
The Ministry of Finance bill “attributes” interest. This means that interest is calculated as the difference between the price you pay for security and the amount you get at maturity.
The federal government will not send you interest payments. This is because the Ministry of Finance’s bills are sold at less than face value. But once they mature you will be paid the current face value of the bill.
For Treasury bonds, the government pays a fixed amount of interest every six months until maturity.
Suppose you buy a bond for $1,000 and have an interest rate of 4%. In this case, you will receive $20 every six months.
Final results on financial obligations and Treasury bills
When investing in debt securities, consider making the best choice for your short-term and long-term goals, taking into account these significant differences between the Treasury bill and the Treasury bonds.
Treasury bills range from 4 to 52 weeks and have a more diverse maturation period. Treasury bonds have the longest maturities set at 20 and 30 years.
Treasury bills pay off when they mature or sold without paying interest payments. The Ministry of Finance pays interest twice a year.
Treasury bills act like portfolio cash and can become a safe port during turbulent economic conditions.
Treasury debt can provide a reliable revenue stream, but if interest rates rise, it can result in losses of value in the secondary market.
©2025 The Kiplinger Washington Editors, Inc. was distributed by the Tribune Content Agency, LLC.
The views and opinions expressed are those of the author. They are for general informational purposes only and should not be interpreted or interpreted as recommendations or solicitations. Epoch Times does not provide investments, taxes, legal, financial planning, real estate planning, or other personal financial advice. Epoch Times is not responsible for the accuracy or timeliness of the information provided.
