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As a practical matter, most of the return you earn from investing in Treasury Bills is taxed right away as ordinary income. Thus, if you
As a practical matter, most of the return you earn from investing in Treasury Bills is taxed right away as ordinary income. Thus, if you are in a 40% tax bracket and you earn 5% on a treasury bill, your after-tax return is only .05 x (1-.40) = .03, or 3%. In other words, 40% of your return goes to pay taxes, leaving you with just 3%. Once you consider inflation and taxes, how does the long-term return from Treasury Bills look?
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