How to Invest in T-Bills and Government Bonds (A Real Guide for Beginners)

The word bond spelled with scrabble blocks on a table

If we’re being real, most of us didn’t grow up learning how to invest in government bonds. I sure didn’t. I remember my first time trying to buy a T-bill—confused, clicking around, and wondering if I was doing it right. Spoiler: I wasn’t. But now, after a few years and a few mistakes, I can walk you through exactly how to invest in T-bills and government bonds, whether you’re just starting out or want to make smarter moves.

This isn’t a dry finance lecture. It’s a real guide from someone who’s been there, made the mistakes, and wants to save you the hassle.

What Are T-Bills and Government Bonds?

Let’s start with the basics. Treasury bills (T-bills) and government bonds are both ways to lend money to the U.S. government. In return, they pay you interest—or, in the case of T-bills, they pay you back more than you lent.

T-Bills are short-term (usually 4 weeks to 1 year). You buy them at a discount and get the full face value when they mature. No regular interest payments.
Treasury Notes are medium-term (2–10 years). They pay interest every 6 months.
Treasury Bonds are long-term (10–30 years). They also pay interest every 6 months.

All of these are backed by the U.S. government, which makes them one of the safest investments out there. Not risk-free, but close.

Why Invest in T-Bills and Bonds?

Not gonna lie, I didn’t start investing in T-bills because I was chasing high returns. I started because I wanted something safe. I was tired of the rollercoaster of the stock market and wanted a place to park some cash without losing sleep.

Here’s what I’ve learned:

Safety: If the U.S. government defaults, we’ve got bigger problems.
Liquidity: You can sell most of these before maturity if you need the money.
Tax benefits: Interest from T-bills is exempt from state and local taxes.
Flexibility: You can buy as little as $100, which makes it accessible.

How to Buy T-Bills and Government Bonds

There are two main ways to buy T-bills and government bonds: directly through the government or through a brokerage.

Buying Directly (TreasuryDirect)

This is the most straightforward way. You go to TreasuryDirect.gov, create an account, and buy directly from the government.

Here’s how it works:

Set up an account: Go to TreasuryDirect.gov and follow the steps to create an account. You’ll need your Social Security number and a bank account.
Choose your security: Decide if you want a T-bill, note, or bond.
Place your bid: You can place a non-competitive bid (you get the average rate) or a competitive bid (you specify the rate you want).
Fund your purchase: Link your bank account and transfer the money.
Wait for maturity: When your security matures, you get your money back.

The minimum purchase is $100, and you can buy in $100 increments. You can also set up auto-reinvestment, which means your money rolls over into a new security when the old one matures.

Buying Through a Brokerage

Most brokerages (like Fidelity, Schwab, or Vanguard) let you buy T-bills and government bonds through your investment account.

Here’s the process:

Log in to your brokerage: Go to the fixed income or bonds section.
Search for Treasuries: Look for U.S. Treasury securities.
Select your security: Choose the type, maturity, and amount.
Place your order: Confirm the purchase and fund it from your account.

The minimum purchase is usually $1,000, which is higher than TreasuryDirect. But brokerages often have more features, like secondary market trading and easier access to bond funds.

What I Wish I’d Known Before I Started

Here’s where things got messy for me. I thought buying a T-bill was as simple as clicking a button. But there are a few things I wish I’d known:

You don’t get regular interest payments with T-bills. You buy at a discount and get the full amount at maturity. If you need regular income, go for notes or bonds.
You can sell before maturity, but you might not get the full face value. If interest rates go up, your T-bill might be worth less on the secondary market.
Taxes matter. The interest is taxable at the federal level, but not at the state or local level.
Auto-reinvestment is a game-changer. If you don’t want to think about it every time your T-bill matures, set up auto-reinvestment.

Treasury Ladders: A Smart Strategy

One of the best pieces of advice I’ve gotten is to build a Treasury ladder. This means buying multiple T-bills with different maturity dates.

For example, you could buy a 4-week, 8-week, 13-week, and 26-week T-bill. As each one matures, you reinvest it into a new 26-week T-bill. This way, you always have money coming due, and you can take advantage of rising interest rates.

Here’s a simple example:

Maturity Date	Amount Invested	Maturity Value
4 weeks	$1,000	$1,005
8 weeks	$1,000	$1,010
13 weeks	$1,000	$1,015
26 weeks	$1,000	$1,020

This table shows how a Treasury ladder can work. Each T-bill matures at a different time, giving you regular access to your money and the chance to reinvest at higher rates if they go up.

Common Mistakes to Avoid

Looking back, I made a few mistakes that I want to help you avoid.

1. Not Understanding the Difference Between T-Bills and Bonds

I thought all government bonds were the same. But T-bills, notes, and bonds work differently. T-bills are short-term and pay at maturity. Notes and bonds are longer-term and pay interest every 6 months.

2. Ignoring the Secondary Market

I didn’t realize I could sell my T-bills before maturity. But if interest rates go up, your T-bill might be worth less on the secondary market. If you need the money, you might not get the full face value.

3. Forgetting About Taxes

I forgot that the interest from T-bills is taxable at the federal level. It’s not a huge deal, but it’s something to keep in mind when calculating your returns.

4. Not Setting Up Auto-Reinvestment

I used to forget to reinvest my T-bills when they matured. Setting up auto-reinvestment saved me a lot of hassle and kept my money working for me.

My Opinion: Is It Worth It?

Here’s my honest take: T-bills and government bonds are not going to make you rich. But they’re a great way to keep your money safe and earn a little extra interest.

If you’re looking for high returns, go for stocks or other riskier investments. But if you want something safe and stable, T-bills and government bonds are hard to beat.

What I’d Do Differently

If I could go back and do it all over again, here’s what I’d change:

Start with a Treasury ladder. It’s a smarter way to invest and gives you more flexibility.
Set up auto-reinvestment from the start. It saves time and keeps your money working for you.
Pay attention to interest rates. If rates are going up, it might be better to wait or buy shorter-term T-bills.
Don’t ignore the secondary market. If you need the money, you can sell your T-bills before maturity, but be aware of the risks.

Final Thoughts

Investing in T-bills and government bonds isn’t glamorous, but it’s smart. It’s a way to keep your money safe, earn a little extra interest, and sleep better at night.

If you’re just starting out, don’t overthink it. Pick a method (TreasuryDirect or a brokerage), start small, and learn as you go. And don’t be afraid to make mistakes—everyone does.

How to Get Started

Here’s a quick checklist to help you get started:

Decide if you want to buy directly or through a brokerage.
Set up an account (TreasuryDirect or brokerage).
Choose your security (T-bill, note, or bond).
Place your bid or order.
Fund your purchase.
Set up auto-reinvestment if you want.

What’s Next?

Once you’ve got the basics down, you can start exploring more advanced strategies, like Treasury ladders or bond funds. But for now, focus on getting started and learning as you go.

If you’ve invested in T-bills or government bonds, I’d love to hear your experience. What worked for you? What would you do differently? Share your thoughts in the comments below.