When you are buying a treasury bill, and you are essentially lending money to the government. Treasury bills are short-term debt obligation backed by the treasury department of the US government with a maturity of under one year and are sold in denominations of $1,000 up to the maximum purchase of $5 million on non-competitive bids.
T bills have various maturity and are issued at a discount. When an investor purchases a T-bill the US government writes investors an IOU. They do not receive regular interest payments as with a coupon bond, but a T-bill does not include interest, reflected in the amount it pays when it matures.
U.s. treasury bills-treasury bills are issued for terms less than a year. this shorter duration makes them a much safer investment.
treasury notes are issued in terms of 2, 3, 5, and 10 years.
treasury bonds are issued in terms of 30 years, and were reintroduced in february 2006.
corporate bonds are issued by various corporations, and are rated as to their risk by moodys or standard & poors. the higher the risk, the higher the return the corporation must promise. you can buy corporate bonds individually, or through a bond fund, from your financial advisor. they are less safe than government bonds, since there is a chance the company can go bankrupt and default on the bond.