US Treasury Security Investments

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.

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 maintenance fees, no matter how much you have invested.

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. They are an excellent choice in a period of high inflation.
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.

The table below provides a summary description of each of the other five U.S. Treasury securities:

Characteristics	Treasury Notes	Treasury Bonds	Treasury Inflation-Protected Securities (TIPS)	I Savings Bonds	EE/E Savings Bonds
Terms (Yr)	2, 3, 5, 7 & 10	30	5, 10 & 20	30	30
Minimum Term of Ownership	None	None	None	1 Year (Penalty if before 5 Yr.)	1 Year (Penalty if before 5 Yr.)
Interest	Yield determined at auction	Fixed (Varies)	Yield determined at auction	Fixed (Varies) + Semiannual inflation rate	Fixed (Varies)
Interest Paid	Every 6 Mo. to maturity	Every 6 Mo. to maturity	Every 6 Mo. to maturity (at adjusted principal)	Added monthly (Paid when cashed)	Added monthly (Paid when cashed)
Purchased Amount	$100 minimum, Multiples of $100	$100 minimum, Multiples of $100	$100 minimum, Multiples of $100	$25 minimum, Maximum $5,000/yr. (Any amount up to $5,000) *	$25 minimum, Maximum $5,000/yr. (Any amount up to $5,000) *
Price	Less than, greater than or equal to face value	Face value	Face value	Face value *	Face value *
Paid at Maturity	Face value	Face value	Adjusted principal or original principal, whichever is greater	Face value plus interest	Face value plus interest
Tax Considerations	Exempt from state & local income taxes, Subject to federal income tax	Exempt from state & local income taxes, Subject to federal income tax	Exempt from state & local income taxes, Subject to federal income tax	Exempt from state & local income taxes, Subject to state & local estate, inheritance, gift & other excise taxes and federal income tax	Exempt from state & local income taxes, Subject to state & local estate, inheritance, gift & other excise taxes and federal income tax

* Electronic Bonds

Be safe, invest in US Treasuries?

Safe Investing

Buying Treasury Securities

Types of Securities

Summary of U.S. Treasury Securities