Buying a bond can be a good idea if you want to invest your money in a safe way. Treasury bonds, also known as treasury securities are considered one of the safest ways to invest your money. This is because the principal is backed by the credit of the United States Government. When you buy a treasury bond, you are basically loaning the government money for a specified about of time. When the bond matures, you will get that money, with interest, guaranteed. Since bonds are backed by the government, it makes it one of the safest ways to invest your money. The longer maturity term there is, the more money you will make over time. If this investment sounds like something you want to do, keep reading to find out how to buy a treasury bond, and what types of bonds are available to you.
There are a few different types of securities that you can buy. They are Treasury Bills, Treasury Notes, Treasury Bonds, and Treasury Inflation-Protected Securities or TIPS. Each one has specific rules about buying them, and each one has a minimum purchase amount. In order to buy any of these securities, you will need to open an account with the treasury through Treasury Direct. Simply go to TreasuryDirect.com, and fill out an application. All of the information below is found at About.com.
The first type of security that you can buy is called a Treasury Bill. These are shorter-term loans that are sold at a discount and will mature within a year. They are sold with maturities of one, three, six, and 12-month maturity rates. These bills are auctioned every four weeks. The discount rate will be determined at auction, and they can be sold any time at current market value. You have to have a minimum purchase amount of $100.
The second type of security that you can buy is called a Treasury Note. They have issued maturities of two, three, five, seven and ten years. The interest on these notes are paid every six months. These can be sold any time at current market value, and the minimum purchase amount is also $100.
The next type of security that you can invest in is called a treasury bond. This type of security has the longest maturity rate with them being sold at 20 and 30 years. Like the other two bonds, it can be sold at any time at current market value, and the minimum purchase price is $100. The interest will also be paid every six months. You will most likely get the most out of your money with this security because it has the longest maturity time.
The last type of security that you can buy is called a Treasury Inflation-Protected Security, also known as TIPS. These are issued with maturities of five, 10 and 20 years. The principal is adjusted with inflation, and is measured by the Consumer Price Index. Like the others, it can be sold any time, the minimum purchase amount is $100, and the interest is paid every six months.
If investing in a Treasury bond seems like the right investment decision to you, it can be very easy to start now. There are many options available to you if you decide you invest, and you can help the government with the debt and get your money back, guaranteed.
