How to Preserve Wealth by Investing in Treasury Bonds

U.S. Treasury bonds are guaranteed investments back by the U.S. government. Unlike stocks, real estate or other riskier investments, you don't risk losing your money when you buy a Treasury bond. If you're willing to accept a lower rate of return in exchange for preserving your principal, Treasury bonds offer a safe, no-hassle investment. You can buy bonds directly from the U.S. government or through a bank or broker. The price of bonds is set at auction; you'll pay either a premium over the bond's face value or a discount below the face value and earn a specified rate of return over the life of the bond.

Noncompetitive Bid

Step 1

Open an account with Treasury Direct. Choose "open an account" on the Treasury Direct website and provide your name, address, Social Security number and other information. Specify an account you'll use to pay for your Treasury purchases. You'll be assigned an account number and log-in information. From this account you can monitor all your Treasury investments.

Step 2

Submit your bid. Go to your account page on the Treasury Direct website and choose the option to BuyDirect. Open the "Bonds" tab and choose the bond you want to buy. Indicate whether you want to reinvest the bond automatically when it matures; when the bond matures the proceeds will be used to purchase another bond with the same maturity as the original bond.

Step 3

Pay for your bonds. Authorize withdrawal of the funds needed to pay for your purchase from the bank account you listed when you opened your Treasury Direct account.

Competitive Bid

Step 1

Contact a bank or broker that handles the purchase of U.S. Treasure bonds. Tell the banker you wish to make a competitive bid for a Treasury bond. You may need to open an investment account with the bank and deposit money into the account to pay for your bond purchase, plus any fees or commission the bank or broker charges.

Step 2

Specify the yield you are willing to accept for your bond. The banker or broker will attempt to purchase a bond with this yield for you. You may not receive the yield you want or you may not be able to purchase the bond for the amount you want.

Step 3

Authorize payment for your bond from your bank or brokerage account.

Tip

  • You can only make a competitive bid through a bank or broker.

Photo Credits

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About the Author

Cynthia Myers is the author of numerous novels and her nonfiction work has appeared in publications ranging from "Historic Traveler" to "Texas Highways" to "Medical Practice Management." She has a degree in economics from Sam Houston State University.

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