How to Purchase Fixed Income Investments

U.S. Treasury bills are among the safest investments in the world. In addition to being virtually risk-free, Treasury bills are extremely liquid (easy to get to when needed). In today's economic environment, purchasing fixed income investments may prove to be a wonderful idea.

Difficulty: Easy

Instructions

1. Understand Basic Terminology - Treasury bills are usually short-term investments. T-bills mature in less than one year. Treasury bonds, however, can be considered long-term investments. These bonds mature in 2 to 30 years.

2. Open an account with TreasuryDirect - If you have a social security number or business tax payer ID, you can open an account directly with the U.S. Treasury Department. Visit http://www.treasurydirect.gov and it will guide you through the necessary steps to purchase these fixed income investments.

3. Purchase Treasury Bills through money market funds - A more practical way to purchase fixed income investments, such as Treasury Bills, is through a money market fund that invests exclusively in T-Bills. These investments enjoy the same low risk and guarantee of the U.S. government as those Treasuries purchased elsewhere. An added benefit of purchasing T-Bills through a Treasury-only fund is immediate access to your money. You can have your money wired to a bank, or even write checks against it. In this way it acts like a bank account, only with higher interest rates.

Tips & Warnings

• Contact your local CPA before committing any money to investments
• Understand the tax ramifications of investing in Treasury Bills

Resources

• Treasury Direct
• How to Reduce Debt
• How to Sell Covered Calls

[patti80]

on 12/6/2008 Thanks for the info. Good step by step.

[pfincome]

on 12/6/2008 Thanks for the detailed information. Not a bad investment in this economy.