How to Buy Treasury Bonds

U.S. Treasury bonds are relatively safe long-term investments. Learn how to buy them directly from the government or through brokers, banks and exchange-traded funds.
Alieza Durana
By Alieza Durana 
Edited by Chris Davis

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Nerdy takeaways
  • Treasury bonds are low-risk, long-term investments issued by the U.S. government.

  • You can buy them from the government directly, and many buy them through a brokerage, retirement or bank account.

  • Treasury bond owners pay federal taxes on the investment interest earned but no state or local taxes.

What is a Treasury bond?

Treasury bonds, also called T-bonds, are low-risk securities issued by the U.S. government that pay a fixed rate of interest. As a T-bond investor, you essentially make a loan to the government, and it pays you back with interest over time. 

Here are some Treasury bond basics: 

  • They're issued in 20- or 30-year terms. 

  • They can be purchased in increments of $100.

  • Treasury bonds pay interest semiannually (every six months) until the end of the term.

  • They're low-risk, long-term investments guaranteed by the U.S. government. 

The current rate for 20- and 30-year bonds is 4% and will be next updated in February 2023. 

» Learn more: Guide to Treasurys 

Where to buy a Treasury bond 

While you can buy T-bonds directly from the source — the U.S. government — one of the most common ways people add them to their portfolio is by investing in Treasury exchange-traded funds or mutual funds through bank, brokerage or retirement accounts. 

From a broker or a bank 

Exchange-traded funds and mutual funds are ways to buy government bonds in bulk on a brokerage platform. An exchange-traded fund, or ETF, is a basket of investments — such as stocks or bonds — from which you can buy as many or as few shares as you like. Treasury ETFs invest in U.S. Treasury securities, and they are low-cost investments that can be bought and sold like any ETF. Like ETFs, mutual funds are another way investors pool resources in order to get exposure to many securities without having to purchase or manage them.

According to Nicholas Juhle, a certified financial analyst and chief investment officer at Greenleaf Trust, ETFs and mutual funds offer the convenience of owning a number of Treasury bonds that mature at different times and having them managed for you. 

“There's a system in place. When the bonds mature, they're rolling that back into new Treasurys for you all the time,” he says.

To understand what the ETF or mutual fund you’re interested in contains, Juhle recommends checking its prospectus. 

“Each ETF or mutual fund is going to have a prospectus that describes exactly what can and cannot be held,” Juhle says. For example, this might include whether the fund holds 80% T-bonds or 100% T-bonds.

» Learn more: What is an ETF 

Directly from the U.S. government through the TreasuryDirect website

If you want to bypass brokerages and buy direct from the government, be sure you have these three pieces of information handy if you do: a taxpayer identification number or Social Security number, a U.S. address, and a checking or savings account to link for payment. 

To get started:

  1. Go to TreasuryDirect.gov (or skip to step five if you already have an account).

  2. Choose the type of account you’re selecting: an individual account, business or organizational account, or estate and trust account.

  3. Provide personal information including: a taxpayer identification number, or TIN; a U.S. address; and a bank account.

  4. Create a password and username to open a TreasuryDirect account.

  5. Once your account has been confirmed, open the account and select the Buy Direct tab.

  6. Specify the security you want — in this case Treasury bonds — and the amount you want to buy.   

  7. Select buy.

When the bond matures, the yield lands directly and automatically in your account.  

Important Treasury Bond Terms

Key terms

Definitions and examples

Annual coupon payment

The total investment interest payment over the course of 1 year.

Coupon payment frequency

How often investment interest payments are made. T-bond coupon payments pay every 6 months until maturity.

Discount price

The price of the bond if it falls below face value.

Face value

The price of the bond if held to maturity.

Interest rate

The amount a lender charges a borrower to loan them money. The interest rate for T-bonds as of November 2022 was 4%.

Price

What investors will pay for a (Treasury) bond, which is affected by the economic environment.

Years to maturity

T-bonds mature in 20 or 30 years.

Yield to maturity

The total investment return if a bond is held to maturity.

Frequently asked questions

Treasury bonds are not the same as U.S. savings bonds. While both are U.S. debt securities, a savings bond is a different type of loan to the U.S. government sold in two series: I and EE. And unlike Treasury bonds, savings bonds cannot be bought or sold on secondary markets.

While often lumped in with Treasury bonds, Treasury notes and bills are shorter-term U.S. government bonds. Treasury notes mature in two to 10 years and Treasury bills in four weeks to a year.

Using a brokerage or bank is the only way to trade a Treasury bond before its maturity date. Bonds must be traded outside of TreasuryDirect through a bank, brokerage or dealer by selling T-bonds to investors looking to buy.

Not necessarily. If purchased from TreasuryDirect, you can sell your bond early in the bond market as long as you've held it for at least 45 days. However, this rule does not apply to T-bonds bought on the secondary market.

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