Treasury Bonds explained

Treasury bonds are among the safest and most secure form of investment available. Read on for a comprehensive explanation of Treasury Bonds.

Treasury Bonds
A Treasury Bond is a loan in which the government acts as the borrower. Members of the public provide the loan by buying the bonds and depositing a certain amount with the government. In return they receive a fixed rate of interest for the fixed period. Treasury bonds tend to have relatively long maturities, usually between twenty and thirty years.

Interest rates
Treasury bonds usually have lower interest rates that many other investment options but because they are guaranteed by the government they are almost risk free. Interest is paid twice per year. Most bonds start of at around $1,000 but there are certain purchase minimums for different length maturities.

How to buy
Treasury bonds are available directly to the general public but the transactions with the government are usually carried out by brokers who bid for the bonds in an auction. These bonds are then made available on the market by the brokers. The prices and interest rates for the bonds are then calculated by the market forces. You will then need to open a Treasury Bond account and link this to your bank account.