Treasury bills are known to be low-risk, short-term investments when held to maturity because the U.S. government guarantees them.

Whether T-bills are a good fit for your portfolio depends on your risk tolerance, financial goals and when you plan to use the money.

In general, Treasury bills are most appropriate for conservative investors, people nervous about stock market volatility or those with short-term cash needs, says Cindy Sforza, a certified financial planner in Brea, California.

“They’re backed by the U.S. government, making them virtually risk-free in terms of default, and they offer predictable returns with short maturities,” Sforza says.

As a result, Treasury bills could be a good choice if you are a cautious investor who wants to earn a little interest without the risk that comes with longer-term investments, such as individual stocks.

With stock market investing, it’s a good rule of thumb to keep the money invested for at least five years, so you have time to ride out any stock market volatility. 

T-bills could also be an option for money you’ll need sooner, rather than later.

They’re “highly liquid, ideal for short-term cash needs, like emergency funds or upcoming expenses within a year or two,” Sforza says.

That said, Treasury bills aren’t ideal for longer-term savings, such as retirement funds, if your investment timeframe is longer, Sforza says.

“T-bills’ low risk also means lower returns compared to stocks or bonds with longer maturities, which historically do a better job of outpacing inflation.”