Savings bonds issued by the U.S. Department of the Treasury are sometimes overlooked by first time investors. However, if you’re in need of a valuable investment with exceptionally low capital requirements, you should not ignore bills, notes, and bonds.
When you buy treasury bonds, you are essentially lending the government money. Bonds are used to fund government spending, and aside from a catastrophic government collapse, the return is essentially guaranteed.
Here’s what you need to know about the most popular investments available today.
If you want to make a small investment with a fast turnaround, then bills could be the perfect choice. You can invest as little as $100, and terms range from a few days up to 52-weeks.
Treasury bills are sold at a discount on their face value. As an example, you might pay $95 for a bill that has a face value of $100. Upon maturation of the bill, you would receive the face amount, and the difference of $5 could be considered your interest.
Treasury notes aren’t quite as flexible as bills, because the terms are much longer. However, these terms can allow for a better return. Notes are purchased below, at, or above face value. Throughout the term of ownership, you will receive interest every six months. Upon maturity, you will also receive the face value of the note.
Treasury notes are provided with terms ranging from 2 to 10 years. Buying below face value can allow for a good return when considering both interest and the final maturity payment.
You can invest as little as $100 in notes.
If you want to invest long term, bonds are the best option. Bonds provide a fixed rate of return through interest, and like bills and notes, you will receive the face value of the bond when it matures.
There’s a similar investment strategy here, where you would typically buy below the face value. Buying at face or slightly above could still turn out to be profitable, depending on the interest rate when purchasing bonds.
Treasury bonds are only offered with 30-year terms. You can invest as little as $100.
Low Interest, High Security
Bonds are arguably the most secure investment available today. Interest rates are lower than high-risk speculative investments, but for many people this is acceptable considering the guaranteed return. If you are looking for an affordable investment or even a very safe large investment for the long term, then it’s worth checking out individual products and their interest rates today.
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