Treasuries, more precisely called treasury securities, are one of the most conservatives ways to trade. You can select from different types of treasury securities, but they are all backed by the government, and this guarantee has withstood the test of time. If you’re interested in learning more about this government-backed investment, read more about trading treasuries.
Types of Treasury Securities
These are the basic kinds of U.S. Treasury securities that you can choose from:
* T-Bills: You buy T-Bills at a discount, and you wait for them to mature to their full value. These are fairly short-term investments as they might mature at 52, 26, 13, and even 4 weeks. The liquidity of T-Bills may make them a good introduction to trading treasuries.
* T-Notes: T-Notes work differently than T-Bills, and as such, they represent a sort of middle ground. You buy T-Notes for $1,000, and they have the same face value when they mature. You can profit from them because they pay interest twice a year. You can buy a T-Note that will mature in 10, 7, 5, 3 or 2 years.
* T-Bonds: When many people think of treasuries, they thing of treasury bonds. They work very much like T-Notes because they pay interest twice a year and have the same face value at maturity. However, they mature in 30 years.
How To Trade Treasuries
You can, of course, buy treasury securities directly online at an auction. Some of these products are only offered at certain times of the year, so you might not find every product at every official auction. However, you can also buy these kinds of security on the secondary market from investors who want to cash out before their products have fully matured. You will not get a paper certificate, but you will get your transaction recorded within the system digitally.
While these are generally considered one of the safest ways to invest or save money, they carry some amount of risk. For instance, interest rates could change. Also, inflation rates might eat away at your fixed-interest profits.
Mostly, you won’t risk losing your investment. What you might risk is losing the opportunity for better returns elsewhere. This is particularly true if you lock in the longer maturity dates. Of course, you also have the option of trading your treasury security on a third-party market. If market conditions have decreased the value of your security, you may not find buyers who are willing to pay you what you initially invested.
How To Learn More About Trading Treasuries
You can visit the official website at TreasuryDirect.gov to learn more about treasuries and the direct market for buying them. Even though your income may be taxable under federal rules, you can generally exempt this income for state taxes.
Many different kinds of investors use these securities because they guarantee principal and interest. They might offer a good choice for you if you want to secure at least part of your portfolio this way with a safe and conservative investment.