Short maturities return your money quickly, which means you repeatedly need to buy something new. If rates have fallen by then, the next bill earns less. If rates have risen, it earns more. No one knows in advance which it will be.
Common approaches
- Roll: buy a new bill of the same term at maturity.
- Ladder: hold bills maturing at regular intervals, so that only part of the money is exposed to the rate on any given date.
- Hold cash: keep the proceeds available for a known need.
The example below compares a constant rate with a changed rate after the first cycle. Both rates are assumptions you set. Neither is a forecast.
Try it: rolling 13-week bills
- If the first rate never changes
- 10,414.88
- If rates change after cycle 1
- 10,335.50
- Difference
- −79.38
Compares two assumptions you set. Ignores fees, spreads and increments. Neither line is a forecast.
Key points
- Each maturity is a new decision at new rates.
- Ladders spread that decision across dates.
- Projected rolled returns are assumptions, not outcomes.
General information only. It is not investment, legal or tax advice. Details vary by market and can change, so check the issuer’s current rules.