How To Buy Treasury Bonds in the U.S. March 2025

Types of Treasury Bonds

Government securities are often collectively referred to as “Treasury bonds,” but in reality, there are several types of Treasuries available. The primary distinguishing factor among these securities is their maturity date, which refers to the time period that must elapse before the principal amount is repaid. In general, Treasuries are issued in three different maturities.

• Treasury bonds (T-Bonds): This first type, which are also known as “the long bond”, are a type of securities that tend to have the longest maturity periods, typically ranging from 20 to 30 years. 

• Treasury notes (T-Notes): These generally mature within 2 to 10 years. The 10-year T-note is widely tracked and often used as a benchmark for interest rates on consumer loans such as mortgages. 

• Treasury bills (T-Bills): These are issued with the shortest maturity periods available. T-bills can mature in just a few weeks or months, with the longest maturity term being up to one year.

How To Buy Treasury Bonds

There are two ways to buy Treasuries: new and used. 

Buying from the U.S. Treasury

If you are looking to purchase newly issued Treasury bonds, the U.S. Treasury allows individuals to invest through its Treasury Direct website. The process to purchasing Treasury bonds in this way is quite simple, all you need is a U.S. tax identification number, an email address, and access to a bank account that will fund your purchases. 

The U.S Treasury sells Treasuries through online auctions that are held at different times, depending on the type of Treasury. 

• T-Bills: weekly auctions 

• T-Notes: monthly auctions 

• T-Bonds: quarterly auctions, on the first Wednesday of February, May, August and November. 

During the auction bidders can choose between two methods, non-competitive or competitive bidding. 

• Non-Competitive: Non-competitive bidding is recommended for those who are new to securities trading as it guarantees acceptance of the bid at whatever interest rate is decided at the auction.

• Competitive: Competitive bidding allows bidders to specify the interest rate they want to receive, but the bid is only accepted if it is less than or equal to the rate set by the auction.

The minimum requirement for buying a Treasury is usually $100, and while the typical lot size is $100,000 or $1 million, investors can purchase less than that, with the maximum investment amount capped at $5 million.

Buying Through A Broker or Bank

Investing in Treasury securities can also be done through a financial institution, like a bank or brokerage firm. This way of buying Treasury bonds is considered easier, however, the institution or firm you go through may charge a fee to submit your bid. 

If you are looking to purchase an old T-bill, note, or bond, you have to get one that’s already trading on the secondary market (the major stock exchanges). Additionally, you will also need a brokerage or investment company to purchase a Treasury bond mutual fund or exchange-traded fund (ETF). The upside to choosing a fund, as opposed to the securities themselves, is that you can buy fund shares for a fraction of the bonds’ price. And of course, with these funds — which own a basket of various T-bills, notes, and bonds — you get immediate diversification for the income portion of your portfolio.

The Best Brokers For Buying Treasury Bonds In The U.S.

If you’re looking to invest in Treasury bonds in the United States, choosing the right broker is an important first step. The process of buying Treasury bonds can be complex, so having a broker that can provide guidance and support can be invaluable.

• TD Ameritrade: TD Ameritrade is known as one of the most popular brokerage firms in America. They offer several types of Treasury bonds such as T-bills (Treasury bills), T-notes (Treasury notes), and T-bonds (Treasury bonds). The platform provides excellent research tools that allow investors to analyze potential investments thoroughly. Additionally, they have no minimum deposit requirement when opening an account.

• Interactive Brokers: Interactive Brokers offers direct access to multiple bond markets worldwide through their IBKR Bond Marketplace. It allows customers to trade government securities from over 30 countries globally. Besides offering competitive pricing compared with other brokers, they also provide low margin rates if borrowing funds are required.

• E*Trade: E*Trade has been around since 1982 and has become one of America’s largest online trading platforms over time. The company offers various types of Treasury securities such as TIPS (Treasury Inflation-Protected Securities) along with traditional Treasuries like bills or notes/bonds; however, there is a $1k minimum deposit needed when opening an account.

Choosing between these three top-rated brokers depends on individual preferences and investment goals. TD Ameritrade is best suited for beginners or those who want to invest in Treasury bonds with no minimum deposit requirement. Interactive Brokers, on the other hand, is ideal for experienced investors looking to diversify their portfolios globally while also enjoying low pricing and margin rates. E*Trade can be a great option for those who prefer traditional Treasuries along with TIPS but need to have at least $1k available when opening an account.

Overall, each broker has its own unique features that make them stand out from one another. We hope this article helped you understand better which broker suits your investment needs when buying Treasury bonds in the U.S.

FAQ’s

• What should I consider before buying Treasury bonds? 

Firstly, it’s important to understand the liquidity of your investment. The maturity date of your Treasuries will determine how easily sellable they are. Generally speaking, shorter-term Treasuries such as bills with maturities of a year or less are more liquid than longer-term ones like 30-year bonds.

That being said, Treasuries are considered pretty liquid overall since there is always a market for U.S. government bonds. However, keep in mind that the price they fetch will depend on their coupon rate compared to prevailing interest rates.

Next up is risk versus return. While no investment is entirely safe from risks, Treasuries come pretty close due to their negligible level of risk – these securities are backed by the United States government after all! There’s virtually no chance that you won’t see a return on your investment. However, because there is less risk involved with Treasury Bonds compared to other income-oriented securities such as stocks or corporate bonds; returns may not be as great either – particularly for longer-term investments like 30-year T-bonds which generally pay higher interest rates than shorter T-notes do.

Lastly, let’s talk about taxation benefits when it comes to Treasury Bond investing: While federal income tax applies on them, interest earned from Treasuries investments remains exempt from state and local taxes which could benefit investors living in high-tax jurisdictions.

Do note though that selling a bond before its maturity date counts as capital gain or loss – depending on whether one makes profit or not – so investors should keep this in mind.

Overall, investing in Treasury bonds can be a great way to diversify your portfolio and minimize risks while still earning returns. By considering factors such as liquidity, risk versus return, and taxation benefits; you’ll be better equipped to make informed decisions when it comes to Treasury Bond investments.

• Should you buy a Treasury bond?

As an investor, you’re probably aware that there’s no such thing as a completely risk-free investment. However, there is one type of instrument that comes pretty close – Treasury bonds, T-bills and T-notes. These securities issued by the U.S. government offer investors a reliable source of income with minimal risk involved. They’re particularly attractive to older investors who rely on their investments to generate income or those who prefer not to take any risks with their principal amount.

But what about younger investors? While Treasuries may not offer the most exciting returns or growth opportunities, they can still play an important role in diversifying your portfolio and reducing overall risk. By adding Treasuries into your asset mix, you balance out highly speculative stocks and other high-risk investments. This helps reduce the volatility of your portfolio while ensuring steady returns over time.

Overall, whether you’re young or old, conservative or aggressive in your investment strategy. Treasury bonds can be an excellent addition to any well-rounded financial plan. So why not consider adding them to yours today?

• What is the minimum investment required to buy Treasury bonds?

The minimum investment amount is $100, but subsequent investments should be made in increments of $100.

• How much interest will I earn on my investment?

The interest rate varies depending on market conditions and bond maturity date, but it is paid semi-annually and fixed throughout the bond’s life span.

• What types of Treasury bonds are available for purchase?

There are three main types: T-bills (maturities less than one year), T-notes (maturities between one and ten years) and T-bonds (maturities greater than ten years).

• Can I sell my Treasury bond before its maturity date?

Yes, you can sell your bond anytime on secondary markets like NYSE or NASDAQ; however, this may result in capital gains or losses based upon current market conditions

• What happens if I hold onto my bond until its maturity date?

You will receive your initial principal back plus any accrued interest earned during the life span of your bond

• Are Treasury bonds a safe investment option?

Yes, they are considered to be one of the safest investments because they are backed by the full faith and credit of the U.S. government.

Investing in Treasury bonds can be an excellent way to diversify your portfolio while minimizing risk. With this comprehensive guide we hope we’ve answered all of your questions about how to buy Treasury bonds in the U.S., making it easier for you to make informed investment decisions.