Investing Fundamentals

My Name is Bond, Treasury Bond

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Table of Contents  
  1. Show Notes

We’re talking all things treasury today on Listen, Money Matters. Treasury bills, notes, and bonds.  Which, if any should you invest in?

Were you given bonds as gifts when you were a kid?  It may have seemed like a lame gift at the time but there probably aren’t many other gifts you still have decades later.

A Treasury Bill has a maturity date from 91-364 days.  A Treasury Note, from 2, 3, 5, or 10 years.  And a Treasury Bond, 30 years.

Buying a bond is buying debt. Buying bonds is less risky than buying stock because bond holders are among the first to get paid even if a company goes bankrupt.  The yield is low though, less risk equals less gain.

Because it is unlikely that the US government will go bankrupt, these are among the safest investments you can make.

A bill doesn’t pay interest but is bought at a discount and when mature, pays at the full value.

A note does pay interest.  When it matures, you get back what you paid for it but you are getting interest payments in the meantime.

All of these investments are very liquid so if you need it, you can have cash in hand very quickly.  You also don’t have to pay state or local taxes on gains made through Treasury buys, still pay federal taxes though.

The younger you are, the less heavily weighted you should be in bonds as opposed to stocks.  You can afford to be more risky when you’re younger.  Hold off on going deep into bonds until you are nearing retirement age.

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Show Notes

Treasury Direct:  Where you can buy the things discussed in today’s episode.

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Candice Elliott - Senior Editor
Candice Elliott is a substantial contributor to Listen Money Matters. She has been a personal finance writer since 2013 and has written extensively on student loan debt, investing, and credit. She has successfully navigated these areas in her own life and knows how to help others do the same. Candice has answered thousands of questions from the LMM community and spent countless hours doing research for hundreds of personal finance articles. She happily calls New Orleans, Louisiana home-the most fun city in the world.

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