Spanish T-bills vs money-market funds: where to park short-term cash?

If you're looking for somewhere to keep cash you need to preserve safely and have available short-term —your emergency fund, savings for an upcoming purchase—, the two options that come up most are Spanish Treasury bills (Letras del Tesoro) and money-market funds. Both invest in top-quality short-term debt, but they work quite differently.

What a Spanish Treasury bill is

It is short-term Spanish government debt (usually 3, 6, 9, or 12 months) issued by the Spanish Treasury. You buy it below face value and receive the full face value at maturity: the difference is your return. They are bought at auction —directly on the Treasury's website or through your bank/broker— in multiples of €1,000, with €1,000 as the minimum amount.

What a money-market fund is

It is an investment fund that spreads your money across high-quality, very-short-term public and private debt (bills, commercial paper, deposits…). You buy and sell units on any business day through your broker, usually with no meaningful minimum, and the net asset value updates daily.

The difference that matters most: taxation

Here is the nuance that gets explained least, and that changes the decision the most:

• Treasury bills: each maturity (or sale) is a taxable event. The gain is taxed as investment income within the savings tax base (19% up to €6,000, 21% up to €50,000, 23% up to €200,000, 27% up to €300,000, and 28% above that) with no withholding at source, so you receive the full amount and settle later in your tax return.
• Money-market funds: like any Spanish investment fund, they benefit from tax deferral: if you switch your money to another fund (instead of cashing out), there is no taxable event at that point. You only pay tax when you finally redeem to cash, at the same brackets as T-bills.

If you're going to keep rolling over your short-term cushion for years, that ability to switch funds without triggering tax each time is a real advantage of money-market funds over T-bills — not a minor footnote.

Liquidity

A T-bill is "locked" until maturity; you can sell it earlier on the secondary market, but at a price that may not favor you. A money-market fund can be redeemed on any business day, with cash available in your account within a few days — more flexible if you don't know precisely when you'll need the money.

What about returns?

We deliberately don't give a specific figure here: the return on both products moves with prevailing interest rates (largely set by the ECB) and changes constantly. In practice, T-bills and money-market funds tend to move in similar ranges, since they invest in similar assets. Always compare the current return at the time you decide, not a number from an article.

In short

• T-bills: €1,000 minimum, no withholding but taxed at every maturity, liquidity limited until maturity.
• Money-market fund: more flexible access, tax deferral if you switch instead of cashing out, liquidity within business days.
• See a real money-market fund example, with its TER and factsheet, in our fund catalog.