What is a Treasury Bond?

A treasury bond is a form of investment offered by the U.S. government, offering investors a very conservative and safe vehicle for small growth over long periods of time. Treasury bonds are very similar to treasury bills and notes, in that they are all backed by the federal government. However, treasury bonds are the longest-term investment of the three, offering the highest rates of return.

Safe Investments

Treasury bonds are about as safe of an investment as you will ever see, as they are backed by the U.S. federal government.

Purchasing

Treasury bonds can be purchased from many sources, including bond brokers, banks, other financial institutions, and directly from the U.S. Treasury.

Price Fluctuations

Treasury bond prices move for a variety of reasons, including overall market rate movement, value of the U.S. dollar and performance of other common investment vehicles.

Term of a Treasure Bond

Treasury bonds are typically 30-year investments, paying out at maturity in full, and paying interest dividends every six months to the bond holder.

Disadvantages of Treasury Bonds

The main disadvantage of treasury bonds is the relatively low interest rate, as compared to less conservative investments with more risks. For instance, in most years the U.S. stock market has outperformed the average treasury bond interest rate.

Resources

• The U.S. Treasury's website for bond information