About Government Bonds
About Bills, Notes and Bonds
You don’t actually receive a certificate when you buy a Treasury bill, note or bond. Your investment is tracked in a book-entry system of accounts that generates a receipt and periodic statements.
Investors need to understand the differences among Treasury bills, notes and bonds.
Treasury bills, as indicated in the table, are short-term instruments with maturities of no more than one year. They fill investment needs similar to money market funds and savings accounts. They could be a place for money an investor may need quickly for an emergency or other purposes. The Treasury bill market is highly liquid; investors can quickly convert bills to cash through a broker or bank. Treasury bills function like zero-coupon bonds. Investors buy bills at a discount from the par, or face, value and then receive the full amount when the bill matures. For example, a 26-week bill paying $1,000 at maturity and producing an annualized yield of 6.28%, would cost $970.28.
For the most current information on treasury offerings visit the Treasury’s Bureau of the Public Debt Web site.
Treasury notes are intermediate- to long-term investments, typically issued in maturities of two, three, five, seven and ten years. These might be purchased for specific future expenses, such as college tuition, or used to generate cash during retirement. Interest is paid semi-annually.
Treasury bonds cover terms of more than ten years are currently issued in 30-year maturities. Interest is paid semi-annually.
All information and opinions contained in this publication were produced by the Securities Industry and Financial Markets Association from our membership and other sources believed by the Association to be accurate and reliable. By providing this general information, the Securities Industry and Financial Markets Association makes neither a recommendation as to the appropriateness of investing in fixed-income securities nor is it providing any specific investment advice for any particular investor. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and sources may be required to make informed investment decisions.