How to Make Money Selling Notes

Invest in America with Treasury notes.

Treasury notes are debt securities issued by the U.S. Department of the Treasury. These notes have various maturity dates ranging from two to 10 years. You may buy Treasury notes directly from the U.S. Treasury Department, a bank or on the secondary market. Treasury notes are purchased at the face value of the note, with a minimum of $100 investment increasing at $100 increments; interest is paid twice a year. You can make money by trading Treasury notes on the secondary markets.

Instructions

1. Purchase the Treasury notes. You can place a competitive or non-competitive bid for a Treasury note. Non-competitive bids simply buy the note for face value at the stated interest rate. You can purchase these directly from TreasuryDirect.gov or a bank or broker dealer. Competitive bids are bought from a broker dealer; you offer your maximum bid for the interest rate you want for securities sold at auction. You are not guaranteed the security but may be able to get the security at a discount to increase your ability to make money on it.

2. Watch the interest rate market. When interest rates go up, the face value of your note goes down. When interest rates go down, the face value of your note goes up.

3. Put your security up for sale when interest rates drop. When the rates drop, your note will be more attractive to investors who seek the higher income from the note. Go through a broker dealer to put your Treasury note up for sale. You may specify the minimum accepted bid for the note or take what the market is offering for your note for a quick sale.

Tips & Warnings

• Making money selling Treasury notes requires a favorable interest rate market where rates are declining after you purchase the notes. If interest rates are not in your favor, you will be able to redeem your notes on the maturity for the face value with the interest paid to you twice a year. This makes it a secure investment where you won't lose money as long as you can hold the note until maturity.

References

• Treasury Direct: Treasury Notes
• Treasury Direct: Treasury Notes FAQs
• Investopedia: Treasury Note