How Do Treasury Bonds Work?

Video Transcript

"Hi. My name is Bill Rae. I'm with Alumni Financial Services. I've been in the business and finance world for well over twenty years. Your question is, how do treasury bonds work? Well, that's an excellent question. I should tell you right off, however, we're not here to give advise on selling stocks or bonds or soliciting. But, what we'd like to get a good understanding is, first of all, what is a bond? Well, a bond in the finance world is a security in which an authorized issuer owes a holder. Nice fancy words for someone who borrows money and agrees to pay you, the one who's lending it, a certain amount of interest in a certain amount of time. That's a bond. Now, when it comes to treasury bonds, obviously they're issued by the US government. There is an excellent website that you can go to and it contains a great deal of information. It is called www.treasurydirect.gov. I urge you to go ahead and take a look. In there, it will explain how you can get your hands on treasury bills, treasury bonds, when they're issued, how often do they pay their interest, when do they mature. When it comes to bonds and treasury bills from the US government, generally anything that is going to be paid off in less than a year is generally referred to as a short term. Anything over a year is a long term. Now, the interest rates generally are paid to you every six months. But again, go take a look. There's plenty of options for you there. And, as always, we advise that you understand, before you sign or buy, know what it is that you're getting into. Know how and when you can get your money back and, if at all possible, a general idea of what return you're going to be paid. We also advise that you always seek sound, competent, licensed advice. My name is Bill Rae. I'm with Alumni Financial Services and we're here to help you build wealth."