Government Treasury Bonds

If the question was asked; "How much do you trust your government"? We can safely say the range of responses would not inspire great confidence. But when it comes to government treasury bonds the real question is actually how much do you trust your government's money. And that is an entirely different prospect.

Especially when the United States Treasury offers an array of investment options that range from short term Treasury Bills to 30 year Series EE savings programs, with Treasury Bonds situated near the comfort equator.

Treasury Bonds are issued in 30 year terms with the price and yield set at auction. The bonds then pay at a fixed rate of interest every six months and are paid at face value upon reaching maturity. Treasury Bonds can be purchased directly through the Treasury Department and they permit accounts for individuals as well as trusts, estates, corporations, and partnerships.

The procedures even allow for the rugged individual who can enter the noncompetitive bidding option accepting the interest rate that is set at auction but having the security of knowing the investment will get the bond desired as well as the full amount desired. If that's too rugged, noncompetitive bids can also go through banks, brokers, and dealers. Which are actually required in the second process, competitive bidding.

Competitive bidding allows specifying a yield and then presents three possible paths. One is accepting the full amount if the bid is equal to or less than the yield determined at auction, or if the bid is equal to or higher than the full amount less than full amount is accepted. The bid is rejected if the yield specified is higher than the yield determined at auction.

There are some complexities involved in the yield to maturity calculations and professional guidance could be beneficial. Although, there are also individual TreasuryDirect accounts, which allow online transactions without charging any maintenance fee regardless of the amount of money invested.

Those who have been in Treasury Bonds long enough may even have the nostalgic experience of actually handling paper certificates which can of course be converted electronically. But Treasury Bonds like everything else in now all electronic. And as close as your government.