Treasury Bonds (T-Bonds) are long-term debt securities issued by the US government with a fixed rate of return. The maturity period for T-Bonds ranges from 20 to 30 years.
T-Bond provides regular interest payments every six months until maturity. Where, the owner will also receive a principal value equal to the nominal value.
What category does T-Bond fall into?
Treasury Bonds belong to a category of US government debt securities known collectively as Treasuries, which are generally considered to be very safe investments because they are guaranteed by the US government's ability to collect taxes from its citizens.
How to Buy T-Bond?
There are several ways to buy T-Bond, including:
Via TreasuryDirect
This is an official website provided by the US Department of the Treasury to facilitate the online purchase of US government securities. You can create a free account at TreasuryDirect and select the T-Bond you want to buy.
You can use a bank account or credit card to pay T-Bond.
Through a bank, broker, or dealer
These are the parties who act as intermediaries between you and the US Treasury. You can contact a bank, broker, or dealer registered with the US Treasury and ask about the procedures and costs of purchasing T-Bonds.
You can also take part in T-Bond auctions through banks, brokers or dealers by providing competitive or non-competitive offers.
Through the secondary market
Secondary market means the market where issued T-Bonds are traded between investors. You can buy T-Bonds from other investors who want to sell them before maturity.
You can use online services such as Treasury Bonds — TreasuryDirect or Treasury Bond: Overview of U.S. Backed Debt Securities - Investopedia to search for T-Bond available on the secondary market.
The price of T-Bond in the secondary market can differ from the nominal price, depending on supply and demand.
What are the Benefits and Risks of T-Bonds?
T-Bond has several advantages, including:
- Provides stable and guaranteed returns, as it is guaranteed by the US government.
- Exempt from state and local taxes, although still subject to federal taxes.
- Easy to trade and cash out, as it has high liquidity.
However, T-Bond also has several risks, including:
- Provides low returns, because it has a low interest rate12.
- Susceptible to inflation, because the real value of T-Bonds can decrease if the inflation rate is higher than the T-Bond interest rate12.
- Susceptible to changes in interest rates, because T-Bond prices in the secondary market can change according to interest rate movements.
Conclusion
Treasury Bonds (T-Bonds) are long-term debt securities issued by the US government with a fixed rate of return. The maturity period for T-Bonds ranges from 20 to 30 years.
T-Bonds provide regular interest payments every six months until maturity, where the owner will also receive a principal amount equal to the nominal value.
T-Bonds fall into a category of US government debt securities known collectively as Treasuries, which are generally considered very safe investments. Because, T-Bonds are guaranteed by the US government's ability to collect taxes from its citizens.
T-Bonds can be purchased through TreasuryDirect, banks, brokers, dealers, or the secondary market. T-Bonds have advantages in terms of stability, taxes, and liquidity, but they also have risks in terms of returns, inflation, and interest rates.
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DISCLAIMER: This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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