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Government Treasury Bonds: Safe, reliable and liquid investments

Government Treasury bonds are United States government debt securities, and these are fixed interest and marketable, and they have a maturity that is more than ten years, usually thirty years. Investors who have government treasury bonds receive interest on these bonds twice a year, with no state taxes owed, only federal taxes on the interest received. The minimum amount needed for a Treasury bond is between one thousand dollars and ten thousand dollars. These bonds are sold first through an auction process, and after the original sale government treasury bonds can be sold on a secondary market. Buying a government Treasury bond is lending money to the government of the United States for a specific time period which is at least ten years, and usually thirty years.

Government Treasury bonds are the safest and most reliable investment. The government of the United States backs these debt obligations. There are no credit risks involved, because the U.S. government will pay the interest and principal when it comes due with no problem. These bonds are marketable securities, because they can be bought, sold, and traded on the open market after the original auction purchase. Some bonds, like U.S. Savings Bonds, are not marketable, because they can only be bought and sold from and to the government, and can not be traded on the open markets. Government Treasury bonds have the highest ratings of any bonds, and this reflects the fact that these bonds are extremely stable and have almost no of default on the interest or principal payments.

Government Treasury bonds are very liquid, which means they are very easy to sell and turn into cash. Some of these bonds can be called, however, and when they are called interest payments stop. Government Treasury bonds can be purchased directly from the government, so individuals do not need to use a broker or end up paying commissions and fees, through a program called Treasury Direct. If there is more than one hundred thousand dollars in the account, there is a charge of twenty five dollars per year for an annual maintenance fee. This program is run by the federal government.

Government Treasury bonds can be the safest way to invest money, but these bonds have the lowest interest payments and returns possible because of their stability and extremely low risk factors. Many financial advisors recommend having part of any portfolio made up of these bonds, to guarantee a low return and low risk component that is long term and stable. There are other investment that may pay a bigger return, but the risks involved are also increased.

Any investor considering bonds should look closely at government Treasury bonds if they are looking for an investment to hold onto that offers small returns that are virtually guaranteed. These bonds are very strongly backed, and the United States government is almost sure to pay off the debts. These bonds have advantages and disadvantages, and they should be considered as an essential part of any trading portfolio. Government Treasury bonds can make a reliable retirement investment for anyone who is looking to retire at least thirty years from now as well. The risk level is very small, but small returns can be reinvested in other securities that pay higher returns without losing the capital amount.

The information supplied in this article is not to be considered as medical advice and is for educational purposes only.

6 Responses to “Government Treasury Bonds: Safe, reliable and liquid investments”

  1. 1
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  6. 6
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