Does anyone here have experience with purchasing treasury bills on Fidelity? I don’t quite understand how they work, even after reading about them. I know Warren Buffett puts his cash in them and also recommends 10% of your total portfolio on them. I’m always looking for a safe place to put cash to diversify from stocks. Any help is greatly appreciated!
An account with Treasury Direct is the best way to buy treasury bills. They’re like a bank certificate of deposit, but the interest works backward.
With a bank CD, you deposit your cash and get it all back plus interest at the maturity date. With a treasury bill, your deposit is less than the face value. Then you get the full face value at maturity (the difference between these two amounts is the interest).
Yes. You’ll need to open a treasury direct account (the US Treasury basically operates its own bond brokerage for investors) and purchase your preferred bill/note/bond.
As others have suggested, the best way to get started and learn is through the TreasuryDirect website. One major downside with buying bills on TreasuryDirect is that for all practical purposes, the money is locked in until the bill matures.
I’ve migrated to buying them through Fidelity because of that limitation. However, I still get most of the information I need from the treasury direct website before buying bills on Fidelity.
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