Treasury Bills are the most well-known safekeeping, especially for conservative investors.
To do that, they are issued by the government.
T-bills offer one of the lowest-risk investment products and zero chance that you can lose your money.
Here is important information about T-bills that you have to know.
When administrations need to increase equity, they, providing a 100% guarantee, supply T-bills, which the audience can easily purchase. What is more, all factors are backed by the government, regardless of the sum, you invest.
Are you a person who is interested in no refusal instant loan Canada constantly? Probably, you need urgent money. But will a loan solve your money problems forever?
What if you are a conservative investor, looking at how to save money with the lowest risk?
If this question relates to you, understanding what are Treasury bills and how they work in Canada will give you a hand.
Firstly, T-bills are good for short-term investments. Secondly, if you want to keep your money safe it will be also an excellent idea to choose T-bills, at the same time you receive little growth possibility.
How Do Treasury Bills Work in Canada?
Just imagine: you get a guaranteed rate of profitability while buying T-bills, but technically, you’re not raising interest.
Essential to know: The yield you get is the difference between what amount of money you spent to buy the T-bill and what you cash it for once it reaches maturity. But in total, all types of treasury bills are rapidly growing and have grown up 4 times since last year.
Why Are T-Bills So Well-Liked?
The main reason after reading which can be understood why T-Bills became very popular is that they are among the few money market instruments that individual investors can afford.
Treasury bills are generally issued in cash denominations such as:
$1,000
$5,000
$10,000
$25,000
$50,000
$100,000 and even $1 million.
On the other hand, Treasury bills are considered the safest investments in the world because they are supported by the federal government. They are deemed to be risk-free.
What Is the Reason Why the Government Issues Treasury Bills?
Administrations issue Treasury bills to fund their operations.
They can have a shortage of budget and need money to operate, mainly to pay public servants or to fund programs and projects.
In addition, it can be used to refinance some of their debt reaching maturity.
Fascinating fact: The rate of return offered by a Treasury bill varies according to the needs of the authority, its repayment capacity, and the central bank’s monetary policies.
How Long Will It Take for Treasury Bills to Mature?
Treasury bills come due when you buy them.
It lasts under a year in Canada.
Treasury bills have maturity dates. There is a table of them below.
1 month
2 month
3 month
6 month
1 year
As an advantage, you can effortlessly resell them before their maturity, so they are a highly liquid investment.
Why Do You Need to Purchase Treasury Bills?
In other words, to buy treasury bills means to lend money to a government in exchange for an exact return. So, what benefits can you expect if you buy T-bills?
Here you can get acquainted with the list of advantages:
100% guarantee: Treasury bills are among the safest investments since they are fully guaranteed by the issuing administration. In this way, if you prefer to be on the safe side, buying T-bills is your appropriate choice.
Suitable for novice investors: If you are only making your first investment steps and don`t understand where to invest to be on top of the situation, in the end, T-bills offer an easy-to-follow investment program.
Affordability: It is possible to purchase T-bills for as little as $1,000.
A short-term: An investment in treasury bills is a short-term investment of between a few weeks and a year. The return increases over time according to how long you hold it.
What Are the Benefits and Drawbacks of T-Bills?
However, as a rule, even something guaranteed goes with pluses and minuses. For this reason, you need to be informed about both sides.
1. Benefits of T-bills
Secured interest and principal.
Can sell at any time.
Available for purchase through tax-free accounts.
Treasury bills are a safe investment that allows you to obtain fixed-income securities from your portfolio. You will not be wealthy with them, but you will receive safety, and Treasury bills may balance more risky investments.
2. Drawbacks of T-bills
Low potential yield about equities.
Yields provided may not beat inflation.
Completely taxable if held in a taxable account.
What Are the Various Types of Treasury bills?
The term Treasury bill generally means short-term bills.
However, there are several similar investment vehicles offered by the Treasury with different maturities: Treasury notes, Treasury bills, and Treasury bonds.
Treasury bills: short-term investments – the expiry date shall not exceed one year.
Treasury notes: these are medium–term investments – the deadline that usually offers lies between 2 and 10 years.
Treasury bonds: these are long-term investments – the provided maturity can range from 20 to 30 years.
Summing Up and Available Alternatives to Treasury Bills
There are a variety of alternatives to treasury bills.
Are you looking for a better yield? If your answer is yes, just look at stocks.
Diversification of your equity investments through mutual funds and ETFs provides good long-term growth and safety potential.
What Are Stock Market Shares?
These are marketable securities that represent a share of a corporation’s capital.
Furthermore, an investor who purchases a stock is a partial owner of the business.
Shares can be publicly traded.
Shares may be purchased through your investment profile through a broker. Stocks can outperform treasury bills thanks to dividends and capital gains in time when you resell them.
What Are Treasury Bonds?
Briefly speaking, Treasury bonds are redeemable debt instruments similar to Treasury Bills. Nevertheless, they have differences: T-bills offer short-term maturity, and when talking about Treasury bonds you have to grasp that they give you medium and long-term maturity.
By the way, they are also issued by the Treasury. The majority of government bonds have a fixed rate and can be redeemed at maturity.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
