Tags: Retirement | retirement | Treasury bills

Treasury Bills and Your Retirement Planning

By    |   Tuesday, 16 June 2015 09:19 PM

Investment advisers often recommend intermediate and long-term government bonds as a stable, guaranteed-income component of a retirement portfolio. But there are scenarios when Treasury bills, also known as T-bills, make sense in a retirement-planning context. This is typically when you're getting close to withdrawing money from a retirement portfolio, and you no longer want that income subject to the ups and downs of the stock market.

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TreasuryDirect explains that government-backed T-bills "are sold in terms ranging from a few days to 52 weeks," and your return is the difference between the security's purchase price and the face value.

Investment adviser and writer Paul A. Merriman recommends short-term U.S. Treasuries for inclusion in taxable retirement accounts, and Treasury Inflation-Protected Securities, or TIPS, for tax-deferred or tax-free retirement accounts, according to MarketWatch.

Inflation has not been much of a factor in the investor economy since the financial collapse of 2008, and its absence has helped to keep interest rates down. This has had implications for short-term treasuries as well as bond funds made up of T-bills, such as the Vanguard Short-Term Treasury Fund Investor Shares fund.

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Forbes contributor Rick Ferri put it this way
in 2014: "Did you miss returns from intermediate-term bond funds because you sat in a short-term bond fund waiting for interest rates to rise? A lot of people did. This strategy has backfired as the opportunity cost of not being in intermediate-term bonds has been more costly than whatever damage rising interest rates might have taken away."

Even so, CNN Money notes, "Next to cash, U.S. Treasurys are the safest, most liquid investments on the planet. Short-term bonds can be a good place to park an emergency fund, or money you'll need relatively soon."

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Investment advisers often recommend intermediate and long-term government bonds as a stable component of a retirement portfolio. But there are scenarios when Treasury bills, also known as T-bills, make sense in a retirement-planning context.
retirement, Treasury bills
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2015-19-16
Tuesday, 16 June 2015 09:19 PM
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