How to Buy Treasury Bonds, Notes and Bills
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Treasury bonds, notes and bills are low-risk 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 owners pay federal taxes on the investment interest earned but no state or local taxes.
What is a Treasury?
Treasurys are low-risk securities issued by the U.S. government that pay a fixed rate of interest. As a Treasury bond, note or bill 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-year bonds is 3.875%, and the current rate for 30-year bonds is 3.625%.
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.
» Learn more: What are Treasury bonds?
Where to buy Treasury bonds, notes or bills
While you can buy Treasuries like 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. There is no difference between the Treasury bonds, notes and bills in terms of where to buy them – all can be bought through brokerage accounts or TreasuryDirect.
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.
Top 5 Treasury ETFs by AUM
Assets under Management (AUM) ($MM)
iShares 20+ Year Treasury Bond ETF
SPDR Bloomberg 1-3 Month T-Bill ETF
iShares 1-3 Year Treasury Bond ETF
iShares 7-10 Year Treasury Bond ETF
iShares U.S. Treasury Bond ETF
» 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.
Here's how to buy government bonds from TreasuryDirect:
Go to TreasuryDirect.gov (or skip to step five if you already have an account).
Choose the type of account you’re selecting: an individual account, business or organizational account, or estate and trust account.
Provide personal information including: a taxpayer identification number, or TIN; a U.S. address; and a bank account.
Create a password and username to open a TreasuryDirect account.
Once your account has been confirmed, open the account and select the Buy Direct tab.
Specify the security you want — in this case Treasury bonds — and the amount you want to buy.
When the bond matures, the yield lands directly and automatically in your account.
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Important Treasury Bond 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.
The price of the bond if it falls below face value.
The price of the bond if held to maturity.
The amount a lender charges a borrower to loan them money. The interest rates for T-bonds as of May 2023 were under 4%.
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.