T-bills are safe — but safety is not the whole story. The downsides are quiet and easy to miss: inflation eats returns, money is locked (or penalised), and opportunity cost grows. Here is the honest list.
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The Downsides
- Inflation risk: if yields lag inflation, real value falls.
- Lock-up/penalties: early exit can forfeit interest.
- Rate risk: resale values fall if rates rise.
- Opportunity cost: higher-return assets may outperform.
- Taxes: interest is taxable in most cases.
Who Should Still Use Them
For short-term, must-be-safe money (emergency cash, upcoming bills) they are ideal. For long-term growth, they are the wrong tool.
Better Mix
Combine T-bills with diversified growth assets so inflation does not drain purchasing power.
FAQ
Are T-bills bad investments?
Not bad — incomplete. They are for safety, not growth.
Should all savings go to T-bills?
No — diversify to keep pace with inflation.
Related: T-Bill Disadvantages and 90/10 Rule.