Why Everyone Suddenly Loves T-Bills (and What They’re Missing)
T-bills are having a moment.
For a lot of investors, it feels like the first time in years you can park cash somewhere “safe” and actually get paid to do it. No drama. No duration. No complicated story.
And to be clear: that’s not irrational. In the right role, T-bills are one of the cleanest tools in personal finance.
But the part many people are missing is this:
T-bills solve a yield problem. They don’t automatically solve a portfolio problem.
This post is a framework for using T-bills intelligently—without turning a short-term solution into a long-term blind spot.
Why everyone loves T-bills right now
There are a few reasons T-bills are suddenly popular (again):
Cash yields are real. After years of near-zero rates, earning meaningful interest feels like finding money you didn’t know existed.
They feel “clean.” Short maturities mean less price volatility than longer-term bonds.
They feel like control. You can ladder maturities and avoid locking money up.
Psychology matters. “Finally getting paid to wait” is emotionally satisfying—especially after a volatile market.
That last point is bigger than most people admit.
When markets are noisy, the appeal of certainty goes up.
What people are missing: the four risks hiding inside “cash”
T-bills are low-risk relative to many assets, but they’re not risk-free in the way people emotionally treat them.
Here are the main things that get overlooked.
1) Reinvestment risk (the silent one)
T-bills mature quickly.
That’s the feature—and the risk.
If rates fall, your “safe yield” can reset lower fast. A portfolio that becomes dependent on today’s cash yield can feel great… right up until the environment changes.
A simple way to say it:
T-bills don’t lock in a yield. They rent it.
2) Duration risk (what T-bills avoid—and what bonds reintroduce)
A lot of investors are buying T-bills because they don’t want bond volatility.
That makes sense.
But then the next step is often: “Should I reach for a little more yield in short-term bond funds?”
That’s where duration risk and credit risk can quietly creep back in—especially if you’re not clear on what you own.
T-bills are straightforward.
Bond funds are portfolios of bonds with changing maturities, changing yields, and changing price sensitivity.
3) Inflation risk (cash can still lose purchasing power)
Even with higher yields, cash-like assets can still lose ground to inflation—especially if inflation is sticky.
T-bills can help reduce the damage versus earning nothing.
But “earning interest” isn’t the same as “preserving purchasing power.”
4) The psychology of safety (and the cost of waiting too long)
This is the big one.
When you’re finally getting paid to wait, it’s easy to turn “waiting” into a strategy.
The risk isn’t that T-bills are bad.
The risk is that investors:
over-allocate to cash because it feels good today,
delay decisions they actually need to make (diversification, rebalancing, equity comp sales, tax planning),
and accidentally trade long-term compounding for short-term comfort.
T-bills are a great parking spot.
They’re a poor destination.
Where T-bills fit best (in a real plan)
In most well-built plans, T-bills are ideal for money that has a job:
Emergency reserves (cash runway)
Near-term spending (tax payments, tuition, home projects)
Opportunity capital (dry powder with a defined purpose)
Portfolio ballast for investors who want less interest-rate sensitivity than longer bonds
The key is matching the tool to the time horizon.
The takeaway
T-bills are popular because they’re doing exactly what they’re designed to do: provide short-term, high-quality yield with minimal drama.
What investors often miss is that the biggest risks around T-bills are not inside the instrument.
They’re inside the behavior:
treating a temporary yield environment as permanent,
letting “paid to wait” turn into “stuck in wait,”
and confusing a cash tool with a long-term portfolio strategy.
If you’re holding a large cash position right now (especially after a liquidity event, bonus, or equity vest), it can be worth pressure-testing the role that cash is playing in your plan: what it’s for, how long it’s needed, and what risks it’s quietly creating.
