This investment is safe from both Trump and the Democrats — and it pays 4.7%
If elections make you uneasy about your portfolio, you’re not alone. Campaigns are noisy, policy paths diverge, and market narratives flip on a sound bite. But there’s one corner of the market that’s about as apolitical as it gets—and lately it has paid around 4.7%: short-term U.S. Treasury bills and Treasury-only money market funds.
Why this is “safe from both”
– Backed by the full faith and credit of the United States. Regardless of who sits in the Oval Office or which party controls Congress, the Treasury’s legal obligation to pay interest and principal doesn’t change.
– Minimal policy sensitivity. Corporate profits, tax codes, sector regulations—those swing with partisan priorities. A 3- to 6-month T-bill matures before most policy ideas become laws, let alone hit the economy.
– Exceptionally low credit risk. The U.S. has a deep, liquid market for its own debt. While Washington occasionally flirts with debt-ceiling drama, markets have historically treated default risk as remote, and short maturities further reduce exposure to brinkmanship.
Where the ~4.7% comes from
Short-term Treasury yields closely track the Federal Reserve’s policy rate. When the Fed is holding rates high to manage inflation, newly issued T-bills and Treasury money market funds pass much of that yield through to investors after modest expenses. In such environments, the annualized yield on:
– 3- to 6-month T-bills,
– Treasury-only money market funds, and
– ultra-short Treasury ETFs
has hovered around the mid-4% range. Yields move with the rate cycle, so check current figures before you buy.
A quiet tax advantage
Interest from U.S. Treasuries is exempt from state and local income taxes. For investors in high-tax states, that can make a 4.7% Treasury yield more attractive than a similar bank account or corporate cash fund that’s fully taxable at the state level.
How to get it
– Buy T-bills directly. Use TreasuryDirect or your brokerage to bid at auction for 4-, 8-, 13-, 17-, 26-, or 52-week T-bills. You receive the discount today and the face value at maturity.
– Use a Treasury-only money market fund. These invest exclusively in U.S. Treasury securities and repos collateralized by Treasuries, avoiding bank and corporate credit exposure. Look for low expenses and “government” or “Treasury-only” in the name.
– Consider ultra-short Treasury ETFs. Funds that hold 0–3 month T-bills or floating-rate Treasuries offer intraday liquidity with modest price fluctuation. They typically publish a 30-day SEC yield you can compare across options.
A simple implementation
– Ladder T-bills. Split your cash into, say, 4-, 13-, and 26-week maturities. As each matures, roll into a fresh bill. You’ll stay close to prevailing yields while smoothing reinvestment timing.
– Park operating cash in a Treasury-only money market fund. It’s a set-and-forget way to capture short-rate income with T+0 settlement and daily liquidity at a stable $1 NAV.
What could go wrong
– Reinvestment risk. If the Fed cuts rates, your yield will fall as bills mature or funds reset.
– Inflation risk. Your real (after-inflation) return can shrink if prices rise faster than your yield.
– Liquidity rules. Treasury-only money funds are less prone to fees and gates than prime funds, but always read the prospectus.
– Political theatrics. Debt-ceiling standoffs can jostle specific maturities, though brief disruptions in front-end Treasuries have historically been opportunities rather than lasting impairments.
Who it’s for
– Safety-first investors who want income without stock or corporate credit risk.
– Savers with near-term goals—tuition, a down payment, an emergency fund—who can’t afford drawdowns.
– Tax-sensitive investors in high state-tax brackets.
Bottom line
The most dependable returns often come from the most boring places. Short-term Treasuries and Treasury-only money market funds don’t care who wins the next election. They just pay what the front end of the yield curve offers, with the U.S. government standing behind them. When that number is around 4.7%, it’s a rare blend of simplicity, safety, and income that both red and blue can agree on.
Note: Yields change with market conditions. Always check current rates, expenses, and tax treatment for your situation. This is general information, not personalized investment advice.
