The Easiest Way to Invest in US Government Bonds
Treasury Direct is a great resource for government bond investments
For investors who want to purchase U.S. Treasuries, or who want to learn more about how the government manages its debt, TreasuryDirect is the place to do so.
In the past, you would purchase Treasuries by going to the bank. You are now able to buy them from the website, banks, brokers or dealers. The TreasuryDirect website allows you to buy bonds directly from the government and have the money drawn automatically from a source of your choice.
Types of Treasuries at TreasuryDirect
There are many types of securities available via TreasuryDirect:
- Treasury bills (maturities of one year and less)
- Treasury notes (maturities of two, three, five, seven, and ten years)
- Treasury bonds (maturities greater than ten years)
- Treasury Inflation-Protected Securities (TIPS)
- Floating Rate Note
- 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, also known as zero-coupon bonds, issued by the Treasury are unavailable for purchase on the site.
How TreasuryDirect Works
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's a number of options for purchasing treasuries, funding your purchases, and receiving 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 TreasuryDirect 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 are the treasury auction schedule and the results of recent auctions. One interesting—albeit frightening—feature is The Debt to the Penny and Who Holds It page, which shows the exact amount of debt outstanding and allows you find 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, and links to other government websites regarding the economy—it even has a section for kids.