Berkshire Hathaway — the conglomerate from which legendary investor Warren Buffett recently resigned as chairman and CEO after 60 years — owns more in Treasury bills than the Federal Reserve.
The company reached that milestone in 2024, when it increased its holdings of Treasury bills to $234.6 billion. And it hasn’t looked back since, with the total value of its T-bills passing the $300 billion mark in 2025.
During his leadership, Buffett was known for keeping large stockpiles of money outside of the stock market so he could pounce on a good deal at a moment’s notice. But what made the Oracle of Omaha love Treasury bills so much?
Here’s what to know about Treasury bills, followed by the reasons they can be a great asset.
What are T-bills?
T-bills are short-term instruments that the U.S. Treasury backs. They are sold in terms ranging from four weeks to 52 weeks.
Bills sell either at a discount or at par, which is face value. Most T-bills are sold at a discount, and the difference between the purchase price and the par amount is the bill’s interest rate.
Once a T-bill matures, the holder receives its face value. Or, the holder can sell the bill prior to maturity.
Here’s why many investors love T-bills.
1. They’re ultra-low risk
At a 2024 annual Berkshire Hathaway shareholders’ meeting, Buffett called T-bills “the safest investment there is.”
The full faith and credit of the federal government backs T-bills. So, as long as the United States doesn’t fall apart, the risk of holding T-bills is minuscule. They are highly liquid and have low volatility.
Because T-bills are so safe, they typically offer lower returns than stock investments. T-bill returns also tend to lag those of corporate and municipal bonds. Still, if safety is more important to you than getting high returns, T-bills are tough to beat.
2. They offer tax savings
In addition to their reputation for safety, T-bills offer tax advantages. You do not have to pay state or local taxes on T-bills, for example. However, you likely will owe federal tax on the interest earned.
3. There’s a low minimum investment requirement
You don’t have to be a Rockefeller — or Buffett — to buy T-bills. The minimum investment is $100, which makes them accessible to millions of Americans.
4. A wide range of maturities is available
T-bills are also available in a wide range of maturities:
- Four weeks
- Eight weeks
- 13 weeks
- 17 weeks
- 26 weeks
- 52 weeks
5. They can be sold easily on the secondary market
If you need to sell your T-bills before they mature, you can easily do so. You have to first transfer the bill to a bank, broker or dealer. Then, you ask the institution to sell the bill on your behalf.
However, note that if you choose this option, current bond prices will determine whether you see a gain or a loss on your sale.
How to buy T-bills
There are a couple of ways to buy T-bills. One is to make a purchase through the federal government’s TreasuryDirect website. Another option is to buy T-bills through a brokerage account.
Each option has its advantages and drawbacks.
Buffett is almost universally regarded as the greatest investor of all time, so it might pay to listen to his wisdom. For more Buffett insights, check out “14 Frugal Life Lessons to Learn From Warren Buffett.”
Add a Comment