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How To Invest in Treasury Bonds

Treasury Bonds issued by the United States Government has a spot in millions of investing portfolios. These safe investments provide predictable returns, and can help hedge against risk or inflation so it is important to understand how to invest in treasury bonds.

Treasury bonds also have an impact on the investing world at large and help influence the rate a bank is willing to lend money for. If you’re looking to learn how to invest in treasury bonds, or if this investment should be part of your portfolio, this article is perfect for you. 

What Are Treasury Bonds?

Before diving into if a treasury bond, also known as a T-Bond, has a spot in your investment portfolio, let’s take a step back and touch on exactly what a treasury bond is. Simply put, a treasury bond is a debt security that the United States government issues.

The United States government needs to borrow money from investors, and as a result, the government will pay a fixed interest rate for the bond’s duration. These bonds have maturities greater than 20 years, and once matured, the investor will also be repaid the par amount

How Do Treasury Bonds Work?

Treasury Bonds are debt instruments issued by the United States government. The money investors provide the government goes to fund the federal government and for economic expansion and growth. 

The interest rate on treasury bonds has an influence on the money supply of the entire country. Depending on the economic condition of the country, and the future economic outlook, the interest rate, or coupon rate, on a treasury bond will adjust. 

Mortgage interest rates are closely tied to the treasury bond rate. If the interest rate on a treasury bond increases, the interest rate a bank is willing to lend money for, will also increase. 

Are Treasury Bonds a Good Investment?

Treasury bonds are not good nor are they a bad investment. An investment is only good or bad depending on one’s personal investing goals.

If the investor is looking for a double-digit rate of return, a treasury bond simply won’t cut it. Treasury bonds are currently paying an interest rate (as of June 2021) of less than 3%. 

If the investor is looking for a safe investment with predictable and consistent returns, a treasury bond may be a perfect option for you. If you’re investing hundreds of thousands of dollars, a treasury bond can certainly be a secondary income stream.

As people approach retirement, they generally look to reduce their risk exposure. Transitioning to a heavily bond focused portfolio is a route many people take.

In retirement, the risk exposure is even further reduced, as capital retention and income generation tend to be the two most important goals. Treasury bonds can do a great job protecting one’s capital, and providing the investor with a secondary income source by way of the yearly return. 

How Much Does a Treasury Bond Cost?

You can purchase Treasury Bonds in multiples of $100. The price may be greater than, equal to, or less than the face value of the bond at the time of auction. 

Can Treasury Bonds Make You Rich?

Treasury bonds are not seen as an investing vehicle that will make you rich. However, treasury bonds can help keep you rich.

The United States government has a strong history of repaying borrowed debt, which is why these debt securities are considered such low risk. Instead of risking your investment in a stock of a publicly traded company, or losing it in a real estate transaction, one could invest in a treasury bond and have a predictable return with minimal risk. 

Of course all investments do in fact have a risk associated with them. If the United States government were to collapse and fail, the borrowed money investors gave via a treasury bond will likely not be repaid. 

3 Simple Steps to Investing in Treasury Bonds

If you are looking to start investing in treasury bonds, there are 3 simple steps you can take to start today. 

Step 1: Open a Brokerage Account & Set Up an Account

First and foremost, you’ll need to decide which brokerage you’d like to invest with. There are plenty of choices out there on the market today, and each of them have their own advantages and disadvantages.

You need to find a brokerage that fits your needs and investing style. Here is a list of some of our favorite brokerages. 


The United States government runs the treasurydirect website. This website allows investors to purchase treasury bills, notes, and treasury bonds. 

Advantages include:

  • The site is safe and secure, considering it is operated by the US Government.
  • The site is a great place to go for educational information.

Disadvantages include:

  • The website is very basic. It allows investors to purchase notes, bonds, and treasury bills, but you cannot purchase other investment vehicles such as stocks. 

Charles Schwab

Charles Schwab has over $3 trillion in assets under management, and is a brokerage of choice for millions of people.

Advantages include:

  • Outstanding customer service! 
  • Investors have a wide range of investment options, including stocks, bonds, and ETFs.

Disadvantages include:

  • You can only invest in the US and Canadian markets if you partner with Charles Schwab. 
  • There are select mutual funds that have a high transaction fee.

TD Ameritrade

TD Ameritrade came around in 1971. Today, the company does over $4 billion dollars a year in revenue, and has $1.3 trillion dollars in assets under management. TD Ameritrade is a well known and respectable brokerage, and for good reason. 

Advantages include:

  • TD Ameritrade offers a tremendous trading platform.
  • The mobile app is world class. 
  • TD Ameritrade offers a wide range of educational classes and resources. These resources help craft and develop your investing or trading style.
  • TD Ameritrade is affordable to use! 

Disadvantages include:

  • The trading platform is intense and extremely robust. Without training, you may feel overwhelmed using this platform. 
  • You can only trade/invest in US markets. 

Fidelity Interactive Brokers

Fidelity is an absolutely huge brokerage with over $10 trillion in assets under management. 

Advantages include:

  • A low fee structure. 
  • Fidelity provides a wide range of educational material.
  • The Fidelity platform is advance and comes with many technical analysis tools.

Disadvantages include:

  • Considering how large the company is, there is often a longer than desired wait time to reach a customer service agent. 
  • Mutual funds come with a higher fee structure and margin rates. 

Step 2: Deposit Your Funds

Once you’ve identified which brokerage is best suited for you and your investing style, it’s time to deposit your money. You’ll typically need a checking account and routing number to complete the initial deposit, although many brokerage accounts will actually let you deposit via your debit card. 

It typically takes 48-72 hours for your funds to clear. Once the funds have cleared, you can begin trading and investing! 

Step 3: Purchase It

Purchasing an investment is not challenging. However, purchasing the right investment(s), the investment(s) that fits your goals and risk tolerance, is a skill that may take years to develop. 

Educate Yourself Before Investing

There is always risk when it comes to investing. But, there is also risk that comes along with not investing!

Before you enter the investing world, be sure to educate yourself on the many different strategies out there. Your goals should align with your strategy. 

Timid to Take the First Step?

Taking the first step is often concerning. Analysis paralysis may kick in, and you may find yourself asking countless questions.

Working with a certified financial planner may be the right move to take. Certified financial planners can make sense of the complicated investing world.

They’ll help answer the questions you have, and will work with you on a personalized investment plan. Everyone has different goals, income and debt levels.

One must take all of these variables into consideration before creating an investment plan. Financial planners will help manage your risk exposure and can also help you achieve a greater rate of return.