How U.S. Government Bonds Work

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Many U.S. government bonds work by investing in companies that are linked to the government, so it is important to research the actual company that the bond is supporting. Learn more about how U.S. bonds do not actually go to the government with information from an investments manager in this free video on investing.

Part of the Video Series: Stocks, Bonds & Investments
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Video Transcript

Okay, how US government bonds work? Well, there, there are number of different types of bonds, of course, with US government. Some of the bonds are backed by the United States government; things such as treasury bonds, treasury notes. But other bonds may just have the, you know, full faith in credit of the US government. That there's an implicit support by the US government on those bonds and it's not that to use bonds coming from the US government, they come from agencies of the US government and that might Fannie Mae, Freddie Mac, Ginnie Mae, those types of things. They are not actually US government entities, they are, but they are agencies of the US government. So when you're buying US government bonds, be sure that you know what you're investing in and maybe it is an agency of the United States government or it's actually the US government that you're investing in. And as with all bonds what you are doing is taking on debt and you can see what the credit rating is on things that are, say US agency bonds because it's not actually with US government; so you want to look at the credit rating of the agencies of that, of that bond.


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