It’s easy to get intimidated by the world of treasury bonds, especially since there are so many different types to choose from. You have plenty of options, from zero-coupon bonds to auction-rate securities, but that can make the decision process all the more confusing.
Whether you want to buy bonds as an investment or as a way to support your country, treasury bonds are the way to go. Still, they aren’t as simple to understand or purchase as many investors think they are—and plenty of scams out there can rob you of your funds if you’re not careful!
To help you navigate this complex landscape, here are three tips by Bill Schantz for buying treasury bonds that can work for you.
Bill Schantz’s Tips to Buy Treasury Bonds
1. Know Your Goals
Buying treasury bonds can be a great way to invest your money, but knowing your goals is essential before making any purchase, per Bill Schantz. For example, are you looking for a short-term or long-term investment? Additionally, you’ll need to decide whether you want a fixed-rate or variable-rate bond. Fixed-rate bonds offer stability, as the interest rate will remain the same for the bond’s life.
Variable-rate bonds, on the other hand, offer the potential for higher returns, but they also come with more risk. Once you know your goals, you’ll be better positioned to choose the right treasury bond for your needs.
2. Decide The Risk You’re Comfortable With
According to Bill Schantz, deciding how much risk you’re comfortable with is essential when considering whether to invest in treasury bonds.
Treasury bonds are classified as either “secured” or “unsecured.”
Secured bonds are backed by the full faith and credit of the U.S. government, which means that they’re considered very low risk. Unsecured bonds are not backed by the government, which makes them a higher-risk investment. However, unsecured bonds typically offer higher interest rates than secured bonds. As a result, your decision about whether to invest in treasury bonds should be based on your risk tolerance.
3. Understand the Market
Treasury bonds are considered one of the safest investments because the full faith and credit of the U.S. government back them. However, it’s still important to understand the market before buying treasury bonds, as per Bill Schantz.
Interest rates can fluctuate, and if rates rise after you purchase a bond, you may not be able to sell it for as much as you paid. There’s also a risk that inflation will eat away at the purchasing power of your investment. Nonetheless, treasury bonds can still be a good option for conservative investors looking for stability and modest returns.
Bill Schantz Recommends to Stay Careful
Whether you want to buy bonds as an investment or a way to support your country, Treasury bonds are the way to go. They’re backed by the U.S. government and can help you keep more money in your pocket while still earning interest. Still, they aren’t as simple to understand or purchase as many investors think they are—and plenty of scams out there can rob you of your funds if you’re not careful!