Investments in the government through Treasury securities, sometimes called government bonds, tend to be a safe, risk-free investment. This is primarily because both short and long-term Treasury bonds are secure and backed by the U.S. government. Safety is one of the major reasons that treasury securities are attractive to investors.
Generally, bonds require time to “mature” which is the amount of time required for you to earn your initial investment in addition to remaining interest. You should consider the bond maturity date when you are deciding which U.S. Treasury bonds can help you grow your money with a safe investment.
There are a variety of different Treasury securities that make for common investments in the market:
Treasury Bills – This form of U.S. short-term Treasury bond will typically mature in about a year, which is when they will begin to pay interest.
Treasury Bonds – These securities generally pay out interest two times each year, but they take a long time, between 20 to 30 years, to mature.
Treasury Notes – Similar to bonds, Treasury notes pay out interest twice yearly. However, this investment will mature more quickly in about 2 to 10 years.
Treasury Inflation-Protected Securities (TIPS) – Commonly referred to as U.S. inflation-protected bonds because they compensate for long-term inflation in order to protect your investment.
Treasury securities are only one of the types of bonds that you can invest your money in. They are popular amongst investors because they are typically the safest form of investment. However, taking on a higher risk can also result in a higher return on your initial investment. Learn more about corporate bonds, which are simply bonds purchased from private companies.