How to Buy Treasury Bonds

Treasury bonds, also called T-bonds, are low-risk securities issued by the U.S. government that pay a fixed rate of interest. As a T-bond investor, you essentially make a loan to the government, and it pays you back with interest over time. 

Here are some Treasury bond basics: 

• They’re issued in 20- or 30-year terms. 

• They can be purchased in increments of $100.

• Treasury bonds pay interest semiannually (every six months) until the end of the term.

• They’re low-risk, long-term investments guaranteed by the U.S. government. 

The current rate for 20- and 30-year bonds is 4% and will be next updated in February 2023. 

While you can buy T-bonds directly from the source — the U.S. government — one of the most common ways people add them to their portfolio is by investing in Treasury exchange-traded funds or mutual funds through bank, brokerage or retirement accounts. 

Exchange-traded funds and mutual funds are ways to buy government bonds in bulk on a brokerage platform. An exchange-traded fund, or ETF, is a basket of investments — such as stocks or bonds — from which you can buy as many or as few shares as you like. Treasury ETFs invest in U.S. Treasury securities, and they are low-cost investments that can be bought and sold like any ETF. Like ETFs, mutual funds are another way investors pool resources in order to get exposure to many securities without having to purchase or manage them.

According to Nicholas Juhle, a certified financial analyst and chief investment officer at Greenleaf Trust, ETFs and mutual funds offer the convenience of owning a number of Treasury bonds that mature at different times and having them managed for you. 

“There’s a system in place. When the bonds mature, they’re rolling that back into new Treasurys for you all the time,” he says.

To understand what the ETF or mutual fund you’re interested in contains, Juhle recommends checking its prospectus. 

“Each ETF or mutual fund is going to have a prospectus that describes exactly what can and cannot be held,” Juhle says. For example, this might include whether the fund holds 80% T-bonds or 100% T-bonds.

If you want to bypass brokerages and buy direct from the government, be sure you have these three pieces of information handy if you do: a taxpayer identification number or Social Security number, a U.S. address, and a checking or savings account to link for payment. 

2. Choose the type of account you’re selecting: an individual account, business or organizational account, or estate and trust account.

3. Provide personal information including: a taxpayer identification number, or TIN; a U.S. address; and a bank account.

4. Create a password and username to open a TreasuryDirect account.

5. Once your account has been confirmed, open the account and select the Buy Direct tab.

6. Specify the security you want — in this case Treasury bonds — and the amount you want to buy.   

When the bond matures, the yield lands directly and automatically in your account.