Sunday, March 12, 2006

Buying US Government Bonds

Buy US Government Bonds

Buying US government bonds is faily easy thanks to Treasury Direct. At Treasury Direct you can buy Treasury bills, notes, and bonds directly from the government. You don't even have to have broker, there are no hassles, and very limited amount of paperwork. Your options to buying US government bonds are via the phone or Internet, or, if you prefer, by traditional paper methods.

Types of US government bonds: You have serveral choices when you are considering buying US government bonds, including treasury bills, treasury notes, TIPS, and Treasury bonds.

Treasury bills, or T-bills, are sold in terms ranging from a few days to 26 weeks. Bills are sold at a discount from their face value. For instance, you might pay $970 for a $1,000 bill. When the bill matures, you would be paid $1,000. The difference between the purchase price and face value is interest. For the latest auction results on T-bills click here.

Treasury notes, sometimes called T-Notes, earn a fixed rate of interest every six months until maturity. Notes are issued in terms of 2, 3, 5, and 10 years. For the latest auction results on T-Notes click here.


Treasury Inflation-Protected Securities, or TIPS, provide protection against inflation. The principal of a TIPS increases with inflation and decreases with deflation, as measured by the Consumer Price Index. When a TIPS matures, you are paid the adjusted principal or original principal, whichever is greater. TIPS pay interest twice a year, at a fixed rate. The rate is applied to the adjusted principal; so, like the principal, interest payments rise with inflation and fall with deflation For the latest results on TIPS click here.

The U.S. Treasury resumed issuance of Treasury bonds with a 30-year bond auctioned in February 2006. The next auction is scheduled for August 2006. Treasury bonds pay interest every six months until they mature. For the latest auction results on Treasury bonds click here.
You can buy bills from us in TreasuryDirect and Legacy Treasury Direct through non-competitive bidding. To purchase US Government Bonds click here to go to Treasury Direct.

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