Short-term Debt Instruments

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If you’re looking to make money on short-term, low-risk debt instruments, you have several options. Treasury bills, commercial paper, municipal notes and federal agency short-term securities are among your choices for investment. U.S. government entities and corporations offer these instruments, as do other countries and businesses around the world.

Treasury Bills

According to Treasury Direct, Treasury bills carry a maturity date anywhere from a few days to 52 weeks. However, Treasury bills do not come with a stated interest rate. Rather, you purchase them at a discount relative to their face value. The difference between the purchase price and the face value is the return you generate from the instrument. Treasury bills do not require a substantial initial investment, either. Treasury Direct notes the minimum purchase amount for Treasury bills is $100 as of August 2014.

Commercial Paper

Commercial paper consists of promissory notes with short-term maturities, ranging up to 270 days or less, according to the Board of Governors of the Federal Reserve System. Corporations usually issue commercial paper in a bid to secure short-term financing, and the risk associated with each security dictates its stated and effective yield. Commercial paper is beneficial for investors and companies, with companies using the relatively inexpensive financing to fund operations and complete important transactions.

Municipal Notes

Municipalities often issue short-term notes, which are used to bridge the gap between the receipt of tax revenue and other funds. Reuters notes that there are different types of municipal notes, including tax anticipation notes, bond anticipation notes and revenue anticipation notes. These debt instruments are good if you’re looking for low-risk investments that typically come with insurance. This means that if the municipality defaults on its debt obligation, you’ll receive assistance from the insurance company in recouping your investment. You may also be eligible for tax-free interest on these instruments, depending on the note.

Federal Agency Short-term Securities

If you’re looking for a debt instrument that is backed by the U.S. government, but want a higher rate of interest than is typically offered with Treasury bills or notes, then federal agency short-term securities are an ideal investment. A number of government-related agencies that are not directly part of the government -- such as the Federal National Mortgage Association and the Federal Home Loan Bank -- need financing to fulfill their missions. Government-related agencies are sponsored by the U.S. government, but agency securities are not direct debt obligations of the federal government. Because the government backs these agencies, you face less risk when investing in these securities.