Consider Treasuries if safety of principal is your primary concern.
Because they’re direct obligations of the U.S. Treasury, they’re considered among the safest types of protected investments. When purchased through Schwab, Treasuries are also one of the easiest to trade.
Treasuries are debt securities of the U.S. government issued through the U.S. Department of Treasury. Timely payment of principal and interest is guaranteed by the U.S. government, making them among the highest quality investments available. In fact, Treasuries are the benchmark against which other debt securities are measured.
In any financial climate, U.S. Treasury securities offer investors many benefits, including:
Safety
Backed by the full faith and credit of the U.S. government, Treasuries are considered ideal for safeguarding and preserving your principal.1
Guaranteed return of principal
If held to maturity, Treasuries are guaranteed to repay your original investment. So no matter how volatile the market may be, as a Treasury investor, you never risk your principal if you hold the security until maturity.
Guaranteed with fixed rate income
With Fixed Rate Treasuries, you'll know exactly what your income will be and when you will receive interest payments.You'll receive a steady income of semi-annual interest payments when you purchase Treasury notes or bonds.
Tax advantages
Although federally taxable, the interest on Treasuries is exempt from both state and local taxes. Thus, your after-tax return may be higher than the same yields on fully taxable investments like FDIC-insured, fixed-rate CDs, especially if you live in a high-tax state.
Flexibility
Want a short-term investment for your funds while you decide among alternative investments? Or, are you saving for the long term, like college or retirement? You can choose from the many Treasury issues and maturities available to meet your investing goals.
Liquidity
Looking for a ready source of cash? The active secondary market for Treasuries enables you to sell your Treasury securities before maturity. Of course, you'll receive full face value if you hold a Treasury until maturity.
Choose from Treasury bills, notes, bonds, Treasury inflation-indexed securities and STRIPS
Minimum investment2
Treasury bills
$10,000 face value investment plus $1,000 increments.
Treasury notes and bonds
$1,000 face value investment plus $1,000 increments.
Treasury inflation-indexed securities
The treasury inflation-indexed security is a new security with an inflation adjusted principal amount. Interest payments will be calculated from the adjusted amount (which could be more or less than the original value at issuance depending on changes in the Consumer Price Index (CPI-U)).
If you are looking for investment growth over time, consider STRIPS
STRIPS are Treasury bonds that have been stripped of their interest and principal payments. If held to maturity, they guarantee the return of your principal, plus all accrued interest. Because they're direct obligations of the U.S. Treasury, they're considered among the safest types of investments.
Because STRIPS are sold at deep discount, they usually cost less than their face value. Your return is the difference between what you pay and what you receive at maturity. The interest on STRIPS accrues over the life of the bond and is automatically reinvested. With this compounding of interest, even a small initial investment can achieve growth over time.
STRIPS do not pay interest until maturity, so their prices tend to be more volatile than bonds which pay interest at regular intervals. And although interest isn't paid until your STRIPS mature, it is taxable the year it's credited to you, which is why STRIPS are favored for tax-deferred accounts such as Keoghs and IRAs.
How Much Does a $5,000 Zero-Coupon Treasury Actually Cost?
Years to Maturity
Yield
30
25
20
15
10
5
Maturity Value
4%
$1,540
$1,880
$2,280
$2,780
$3,380
$4,110
$5,000
5%
1,160
1,480
1,880
2,400
3,070
3,920
5,000
6%
870
1,170
1,556
2,090
2,790
3,740
5,000
7%
660
920
1,290
1,810
2,540
3,570
5,000
8%
500
730
1,070
1,580
2,320
3,400
5,000
Numbers are approximations for example purposes only. Contact your Schwab office for current market values.
Whether you're purchasing new issues at auction or previous issues on the secondary market, Schwab makes trading Treasuries convenient for you. Call a Schwab Bond Specialist™ at 888-621-4355. You can place auction orders until 7 a.m. P.T. the day of the auction.
1. The value of "guaranteed" securities fluctuates due to changing interest rates or other market conditions. You may realize either a gain or a loss on your investment, depending on market value when you sell.
2. Effective 8/15/1998, the U.S. Treasury Department lowered the minimum amount on all marketable Treasury bills, notes and bonds to $1,000. Schwab lowered its minimums on all except bills, which will remain at $10,000.
Call us at 866-232-9890
Send us an email