How to Buy Treasury Bills on Vanguard in 2024

Larry, Managing Editor

how to buy treasury bills on vanguard

Vanguard is one of the most popular brokerage platforms and is known for its low-cost and user-friendly platform. Treasury bills, which currently have annual yields of over 5%, can be bought on Vanguard’s platform. Treasury bills offer investors a risk-free 5% yield backed by the U.S. government. Vanguard customers can follow this step-by-step picture guide to learn how to buy Treasury bills.

How to Buy Treasury Bills on Vanguard: A Step-by-Step Guide

First, log into your Vanguard account to follow these step-by-step instructions on how to buy Treasury bills on Vanguard.

1. Log into your Vanguard account. 

2. Click the “Transact” tab and select “Buy & sell” from the dropdown menu. Then, scroll down and click “Trade bonds & U.S. Treasuries”.

step 2 vanguard buy and sell

Click “Trade bonds & U.S. Treasuries”.

step 2a vanguard trade us treasuries

3. Click on the “Treasuries” tab. For Market type, choose “Auction” instead of the default “Secondary” selection.

step 3 vanguard new issue treasuries

4. See the list of new-issue Treasury products.

step 4 vanguard treasury list

This is Vanguard’s full list of new-issue Treasuries. Treasuries that you can buy will be marked with a “Buy” action in the left-hand column.

If you don’t see the “Buy” button, it means you’ve missed the chance to buy it before the auction cut-off date, or it hasn’t been available for purchase yet. Check the U.S. Treasury auction schedule to see when the next auction is, although Vanguard does a helpful job of listing the auction dates for each Treasury.

5. Preview your order before buying your Treasury bond.

step 5 vanguard preview order

In the quantity field, enter how many Treasury bills you want to purchase. Remember that each bond has a face value of $1,000 and that you buy T-bills at a discount. A quantity of 1 means you will purchase a T-bill at a discount to the $1,000.

Vanguard does not offer an Auto Roll option, which is an option to automatically buy another Treasury of the same term and the same amount when this Treasury matures. An Auto Roll option is most often used with short-term Treasury Bills. This feature is not available in Vanguard but can be found on Fidelity and Charles Schwab.

Congrats! You know now how to buy Treasury bills on Vanguard!

Why Treasury Bills Matter Today

Investing in Treasury bills can be smart for individuals looking for a safe and reliable way to grow their savings. Treasury bills are backed by the full faith and credit of the U.S. government, making them one of the safest investments available. Moreover, T-Bills offer competitive yields compared to bank CDs and savings accounts, making them an attractive choice for conservative investors.

If you have a Vanguard brokerage account, we highly recommend learning to buy Treasury bills on Vanguard to take advantage of these higher yields. It’s one of the many ways to earn more on your Vanguard cash.

How Much Money Do I Need to Buy a T-Bill?

Vanguard’s minimum investment for a new-issue Treasury is $1,000 in face value. 

When you buy a T-Bill, you buy the T-Bill at a discount to face value. Each T-bill has a face value of $1,000, so you’ll be paying less than $1,000 for each $1,000 bill. The interest you earn is the difference between what you pay for the T-bill versus the $1,000 you automatically receive at maturity.

What Happens When My T-Bills Mature on Vanguard?

When your T-Bills mature on Vanguard, Vanguard will automatically credit your account with the principal amount. You’ll receive the total face value of the bill, which is $1,000 per bill. The difference between what you paid and the face value of the T-Bill is the interest you’ve earned.

What Are the Tax Implications of Treasury Bills?

Treasury bill interest income is subject to federal income taxes. The interest income is exempt from state and local tax. Interest earned from Treasuries are not taxed as capital gains. The only time you’ll pay capital gains taxes is if you sell your Treasury bill before the maturity date for more than what you paid for it. If you sell it for less than what you paid, you have a capital loss.

Your brokerage typically sends you the necessary tax forms after the year ends.

Does Vanguard Charge a Fee to Buy Treasury Bills?

Vanguard does not charge a fee for purchasing new-issue T-Bills. If you need the help of a Vanguard representative, there is a flat rate of $25 per transaction. To avoid this expensive fee, we recommend you buy Treasuries online on Vanguard’s website.

What are Vanguard’s Treasury Bill Rates?

Vanguard’s Treasury bill rates are found on the Treasury auction page, shown in step 4 of our guide above. 

Are Treasury Bills Cash Equivalents?

Treasury bills are considered cash equivalents in your investment portfolio. They have some advantages when compared to savings accounts. Treasury bills are low-risk investments backed by the U.S. government, making them a safe choice for investors. They also offer higher yields than most savings accounts, providing the potential for higher returns on your investment.

Does Vanguard Offer T-Bill Funds?

​​Vanguard doesn’t offer a fund solely dedicated to T-Bills. However, the Vanguard Treasury Money Market Fund (VUSXX) is comprised of 95% U.S. Treasury bills and 5% other U.S. government obligations and repurchase agreements. Because VUSXX is a government money market fund, it’s required to have at least 99.5% of its total assets in cash, U.S. government securities, and/or repurchase agreements that are collateralized solely by U.S. government securities or cash. It’s one of the most conservative investment funds from Vanguard.

Vanguard money market funds typically have a minimum investment requirement of $3,000, compared to the $1,000 minimum for Treasury bills. Money market funds and short-term bond funds often hold T-Bills as part of a diversified portfolio of low-risk assets. 

Other money market funds from Vanguard include:

  • Vanguard Federal Money Market Fund (VMFXX)
  • Vanguard Cash Reserves Federal Money Market Fund Admiral Shares (VMRXX)
  • Vanguard Municipal Money Market Fund (VMSXX)

These funds hold other investments besides T-Bills, such as Treasury Notes, other government securities, repurchase agreements, or municipal bonds. 

Is It Easy to Create a T-Bill Ladder on Vanguard?

You can easily create a T-Bill ladder on Vanguard, which involves buying multiple Treasury bills with staggered maturities to maximize yield and liquidity.

T-Bill ladders are more flexible than ladders with brokered CDs or other bonds. T-Bills have shorter maturities, allowing you to reinvest or access funds more frequently. While the rates are competitive, T-Bills are more liquid than Vanguard’s brokered CDs.

Should I Buy T-Bills on Vanguard?

Vanguard provides comprehensive research and analysis on Treasury bills, allowing investors to make informed decisions. They offer tools and resources to help you understand the current market conditions and the potential risks and rewards associated with investing in Treasury bills.

Furthermore, Vanguard’s online platform makes it easy to buy, manage your investments, and track the performance of your Treasury bills.

Whether you are a seasoned investor or just starting, learning to buy Treasury bills on Vanguard’s user-friendly interface makes it a great choice for accessing these low-risk investments that will earn a competitive yield on your cash.