Treasury Direct: The Easiest Way to Invest in U.S. Government Bonds
For investors who want to purchase U.S. Treasuries, or who simply want to learn more about how the government manages its debt, one of the best resources you will find is TreasuryDirect. In the old days, anyone who wanted to purchase Treasuries would have to take the time to go to the local bank. That option is no longer available, but the TreasuryDirect site allows you to buy bonds directly from the government and have the money drawn automatically from a source of your choice.
And you won’t have to pay a broker for the privilege.
What Can You Buy Using TreasuryDirect?
Six types of securities are available via TreasuryDirect:
- Treasury bills (maturities of one year and less)
- Treasury notes (maturities of two, three, five, and ten years)
- Treasury bonds (maturities greater than ten years)
- Treasury Inflation-Protected Securities (TIPS)
- Series I Savings Bonds
- Series EE Savings Bonds
TreasuryDirect is best for those who plan to hold their bonds until maturity – selling bonds before they mature is more difficult and costly compared to other aspects of the service. Also, you can only buy new issues. Once a bond is trading in the secondary market, it is no longer available via TreasuryDirect. As a result, those who plan to trade would be better served to look elsewhere. STRIPS, or zero coupon bonds, issued by the Treasury also are unavailable for purchase on the site.
How Does TreasuryDirect Work?
The website describes the service as follows: “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 portfolio 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.”
One of the primary attributes of the site is its ease of use. It makes purchasing Treasury securities simple, and it presents information in a clear, accessible form.
From beginning to end, the process of signing up and arranging to purchase government bonds takes only about 10 to 15 minutes. The website requires you to input basic information, such as your Social Security number, e-mail address, and banking information. The purpose of the banking information is to allow electronic transfer between your bank account and your TreasuryDirect account. Once you are signed up, there are a number of options on what you can buy, how you can fund the purchase, and how you will receive principal and interest payments.
TreasuryDirect also provides a Payroll Savings Plan, which enables investors to make recurring purchases of electronic savings bonds by having money automatically taken from each paycheck and sent to an account at TreasuryDirect.
A Source of Information Regarding Government Bonds
In addition to providing a way to buy government securities, the Treasury Direct website is also full of information that can help you learn more about the Treasury market and the debt operations of the Federal government. Among the useful features is the Treasury auction schedule and the results of recent auctions. One interesting – albeit frightening – feature is the page The Debt to the Penny and Who Holds It, which shows the exact amount of debt outstanding and allows you find out the specific level of debt on any day, month, or year dating back to 1993.
The site also contains an explanation of the auction process, savings bonds rates, calculators, links to other government websites regarding the economy, and even a section for kids.