T-bills are safe, but 'safe' hides real disadvantages: inflation eats returns, money is locked (or penalised on exit) and opportunity costs add up. Here is what to weigh before loading up on T-bills.
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The Real Disadvantages
- Inflation risk: if returns trail inflation, your money buys less.
- Opportunity cost: higher-yielding assets may outperform over long stretches.
- Lock-up/penalties: early exit can forfeit interest.
- Interest-rate risk: resale value falls if rates rise.
- Taxes: interest is taxable in most cases.
Who Should Still Use Them
T-bills suit short-term, must-be-safe money (emergency cash, upcoming bills) — not your long-term growth portfolio.
Better Mix
Pair T-bills with diversified growth assets so inflation does not quietly drain your purchasing power.
FAQ
Are T-bills a bad investment?
Not bad — just incomplete. They are for safety, not growth.
Should I put all savings in T-bills?
No; diversify to keep pace with inflation.
Related: T-Bill Taxes and 90/10 Rule.