U.S. Treasuries-
A quick perusal of the business pages or afternoon market reports might be enough to convince some timid investors to scrap the whole idea of investing and instead just shove their life savings into a shoebox in the closet. But even as the economy struggles to repair itself and the markets start clawing their way back, there are relatively safe, low risk investments out there that can add guaranteed growth to your portfolio. Of course every investment, down to the $50 savings bond you got for your birthday, comes with a degree of risk, but as a general rule treasuries issued by the United States government are considered among the safest of all investments.
Why Invest in Government Bonds?
Government bonds, also known as U.S. Treasuries, are essentially an I.O.U. backed by the “full faith and credit” of the U.S. Government. So barring a complete collapse of the economy rendering the country bankrupt, your investment is secure. The safety of U.S. treasuries, be they notes, bonds or bills comes from their status as fixed income securities, which means that investors are guaranteed to not only get their initial investment back, but also the interest accumulated throughout the life of the bond paid either incrementally or in full at maturity.
These guarantees make U.S. treasuries the safest investment in your portfolio, but with low risk comes low reward making the returns quite conservative. Even so, your gains are not dependent the performance based dividends of a corporation or the wild fluctuations of the day to day stock market and they are not subject to state or local taxes unlike other investments. Additionally, unlike corporate bonds treasury backed securities carry no risk of default, which happens when the bond issuer is unable to follow through on making interest payments. Government bonds are an ideal choice for those planning on using their money for specific milestones. A variety of maturation dates ranging from three months to thirty years makes it easy to select bonds based on when you will need the money, be it retirement, graduation, or your long awaited trip around the world.
How Can I Invest In U.S. Treasuries?
Before investing in anything, it’s important to do your research. Websites can help you decide which type of treasury is best for your needs and how to calculate the return on your investment, and organizations like Moodys offer information and ratings on all kinds of bonds. The net is chock full of resources to not only help you make educated choices but to try and get you to buy bonds through a broker – and brokers mean fees.
The beauty of treasuries is their immense availability and wide variety of price points. Investors will get the most bang for their buck if they buy the securities themselves. With this in mind, the U.S. Treasury Department has set up Treasury Direct which not only serves as an easy way for new investors to jump into the market, but offers research and education as well as jumpstart programs like Ready.Save.Grow. which can purchase savings bonds for as little as $25.
Experts agree that the best investment portfolios successfully balance risk with growth. Government bonds offer an element of long term stability alongside more aggressive investments. The modest returns will never set the world on fire or turn you into an overnight millionaire, but they sure beat a shoebox stuffed back in the closet.
See Also:
- What are Treasury Inflation Protected Securities (TIPS)?
- A Student’s Guide To Investing in Bonds
- What are High Yield Bonds?
- Invest in Structured Bonds?
- So Long, US Dollar As World’s Reserve Currency
Photo Credits:
by DonkeyHotey US Treasury Bond – 3D Illustration
