By: Jeff Bullock
Cash & Treasuries
While rising interest rates makes it more expensive to borrow money for future purchases, it has created some interesting opportunities to invest and make interest. Banks are slowly starting to raise the interest they pay on checking, savings, and CDs, but they still significantly lag the U.S. Treasury market.
U.S. treasuries are bonds, issued and guaranteed by the U.S. Government, to fund our national expenses. The treasury market has an estimated size of $25 trillion. These treasuries can be purchased for one week or 30 years depending on your personal time horizon. With the Federal Reserve raising interest rates, the yield on U.S. treasuries has also risen. Many of these treasuries function similar to that of a bank CD, in that, you buy it for a certain period of time, and at the maturity date, you receive your original amount plus interest back. It’s very simple.
Below are the yields, as of today, of treasury bills and notes:
- 1 month: 2.70%
- 3 month: 3.20%
- 6 month: 3.80%
- 1 Year: 4.00%
The yields change daily, but for a number of months now, if you were to compare these yields to what most banks are offering in savings accounts or CDs, these are significantly higher. If you are worried about the stock market or are looking to get a better return than your bank savings account, the U.S. Treasury market might be worth a look. Markets have been quite volatile digesting news from many angles.
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