Be safe, invest in US Treasuries?

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Safe Investing

Investing in U.S. Government securities continues to be a safe investment with modest returns and tax advantages.  These securities are sold by the U.S. Department of the Treasury Bureau of the Public Debt.  The Bureau's mission is to borrow the money needed to operate the federal government and to account for the resulting debt.  They do this by offering a variety of savings and investment products.  The products are fully guaranteed by the U.S. Government meaning that you can never lose your initial investment.  They can be purchased for as low as $25, for EE/E & I Savings Bonds, or for $100 for the other products.  Some products pay a fixed interest rate and several (I Savings Bonds & TIPS) provide inflation protection.  Interest income is exempt from state and local taxes for all securities and for some products, growth in principal is exempt as well.

Buying Treasury Securities

Investing in US Government Securities is easier than ever thanks to a website called TreasuryDirect provided by the U.S. Department of the Treasury Bureau of the Public Debt.  TreasuryDirect is the first and only financial services website that lets you buy and redeem securities directly from the U.S. Department of the Treasury in paperless electronic form.  You enjoy the flexibility of managing your savings porfolio online as your needs and financial circumstances change - all the time knowing your money is backed by the full faith of the U.S. government.

In your TreasuryDirect account, you can purchase and hold Bills, Notes, Bonds, Treasury Inflation-Protected Securities (TIPS), and savings bonds and it's available to you 24 hours a day, 7 days a week.  The system allows you to purchase, reinvest and sell securities, and perform account maintenance from your computer.  There are no no maintenance fees, no matter how much you have invested.

Types of Securities

Here are the Treasury Securities that are currently available:

  • Treasury Bills are short-term government securities with maturities ranging from a few days to 52 weeks. Bills are sold at a discount from their face value.

  • Treasury Notes are government securities that are issued with maturities of 2, 3, 5, 7, and 10 years and pay interest every six months.

  • Treasury Bonds pay interest every six months and mature in 30 years.

  • Treasury Inflation-Protected Securities (TIPS) are marketable securities whose principal is adjusted by changes in the Consumer Price Index. TIPS pay interest every six months and are issued with maturities of 5, 10, and 20 years. 

  • I Savings Bonds are a low-risk savings product that earn interest while protecting you from inflation. Sold at face value.

  • EE/E Savings Bonds are a secure savings product that pay interest based on current market rates for up to 30 years. Electronic EE Savings Bonds are sold at face value in TreasuryDirect. Paper EE Savings Bonds are sold at 1/2 face value.

Of the six U.S. Treasury securities, all but Treasury Bills may play a role in your retirement investment strategy.  Treasury Bills have a maximum term of 52 weeks and therefore don't provide the longer-term maturity needed for retirement.

Select this link for a summary description of each of the other five U.S. Treasury securities →