“Everyone experiences tough times, it is a measure of your determination and dedication how you deal with them and how you can come through them.?-Lakshmi Mittal
Treasury options in the form of bonds, bills, and notes, are way for the United States government to borrow money from investor to pay down the national debt. When you purchase a treasury security you are basically loaning money to the federal government. The government guarantees that it will pay you, your money back with a bit of interest included. There is actually a great deal of treasury securities but the most popular types of treasury bonds, bills, and notes.
Treasury Bonds ?This type of investment can be made for various lengths of time, all under 10 years. There is also another type of bond called the 'long bond' that has a maturity period of 30 years.
Treasury Notes - This term usually refers to short term investments that mature between 1 and 5 years.
Treasury Bills ?Treasury bills are often called T-Bills. Their maturity period is between 13 weeks, and 52 weeks. However, the average T-Bill is usually kept for 26 weeks or half a year. Unlike treasury bonds, and notes, treasury bills are offered to the investor at a discount.
If a treasury bill has a face value of $20,000 dollars, and the investors bought it for $19,000 dollars, when it matures the investor will get a return of $1000 dollars instead of the minor interest that would have accumulated. This is an incentive for the general public to become active and invest in the nation's economy. This is not a bad rate of return for a mere 6 months.
Most people would love to invest in T-Bills however the initial is so steep that only the rich really have the luxury of this type investment.
There are other types of Treasury options. These include I Bonds, and Inflation Protected Securities. Both protect investments against increases in inflation. The I Bond interest rate is variable and adjusts with the national interest rate. This is done to keep up with the increasing prices of commodities and services.
Inflation Protected Security does not adjust interest rate but does adjust the principle, again to compensate for inflation. You can also invest in U.S. Savings bonds, and Patriot Bonds also known a s STRIPS.
All treasury securities share the same two attributes. The interest that is received on the originally investment is never taxed by the federal government, state, or local government. They are also the safest investments because they have little to risk.
