Treasurydirect.gov is not talked about enough even though it’s a great channel to make your money work for you. It is the first and only financial services website where individuals can make direct purchases of securities from the U.S. Department of the Treasury. It is backed by the full faith of the U.S. government.
Treasury Direct’s Easier Access to Securities
TreasuryDirect is brought by the U.S. Department of the Treasury Bureau of the Fiscal Service. The platform eliminates the need for banks, brokers, and dealers as middlemen. The fact that the platform is backed by the government means that third-party risks are significantly reduced. Governments are less likely to go out of business than brokerage firms.
Third-Party Risk and Automatic Reinvestments
Investors can place competitive or non-competitive bids for securities in auction processes. Types of treasuries available through the platform include :
- Treasury bills
- Treasury notes
- Series I savings bonds
- Series EE savings bonds
- Treasury Inflation-Protected Securities
- Treasury bonds
For investors who may not want to be exposed to the risks of the stock market, treasury bills and bonds on the platform serve as an appropriate alternative. Four-week bills with yields of 2.4% can be purchased on the platform. Its notes have a slightly lower yield of 2.3% while its bonds and TIPS had yields of 3% and 0.5, respectively.
Setting up an account on the platform is relatively straightforward. A bank account can be linked to the platform. This makes it easier to carry out automatic reinvestments. A 4-week bill, for example, can be purchased each week and reinvested automatically. Additionally, users can benefit from a Payroll Savings Plan which allows investors to make recurring purchases of savings bonds.
Zero Fees and Low Minimum Investments
If you’re saving up for a house or you have money tied up, the treasury products is a great way to reinvest funds. Zero fees and low minimum investment thresholds mean that you can start small and test the waters before you dive deep into the investments the platform has to offer. Minimum spend for savings bonds are $25 while the minimum spend for Treasury bills is $100.
The platform also gives users mountains of information about the Treasury market and debt markets of the Federal government. Its Debt to Penny page gives detailed information on public outstanding debt. This could be useful for those looking to supplement their knowledge of what they are buying into.
Taxation and Maturity
Treasury Direct is great for those who prefer to hold their bonds till they mature. However, individuals who would rather trade may be better served on other mediums as it is more difficult and costly to sell bonds before they mature on Treasury Direct.
State income taxes do not have to be paid on the interest of bonds, saving investors a significant amount. There are, however some states that do not exempt taxation. According to the IRS, interest on series EE and series I U.S. Savings Bonds does not have to be included in income until the earlier of when bonds mature or when they are redeemed or disposed of. It says that reporting tax-exempt interest received during the tax year is an information-reporting requirement only and does not convert tax-exempt interest into taxable interest.
Calvin Ebun-Amu is passionate about finance and technology. While studying his bachelor’s degree, he found himself using his spare time to research and write about finance. Calvin is particularly fascinated by economics and risk management. When he’s not writing, he’s reading a book or article on risk and uncertainty by his favourite non-fiction author, Nassim Nicholas Taleb. Calvin has a bachelors degree in law and a post-graduate diploma in business.
I’m shocked that nobody in the financial blogging world doesn’t talk about Treasury Bonds and their benefits more. It’s all about affiliate marketing now. Get back into providing great information for your readers and customers. Just my opinion. This blog is great. You have information about everything.