I hope you had a chance to read last weeks edition of the investment series, where we touched on an investment strategy called REIT, which stands for real estate investment trusts. In this entry, we’re going to discuss the treasuries.
Most people know about bonds as a form of investing in federal capital and gains. However, there is another similar commodity that many stand to benefit from which is not as frequently advertised.
What Is Investing In Treasuries?
Investing in treasuries is also known as investing in government securities, and that’s exactly what it is. Most national governments owe a debt of some sort. Investing in that obligation is essentially loaning money to the government on the assurance that it will be paid back with interest. It’s as simple as that, and considered to be extraordinarily safe because of the credit power backing the loan.
There are many different ways to invest in Treasuries, depending on the length of time you want your investment to mature.
There are Treasury Bills, which tend to mature in under one year. They don’t pay a fixed interest rate usually, but they do tend to be sold at something of a discount. Overall, a fairly attractive option.
Treasury Notes, on the other hand, do offer a fixed interest rate. The trade off for this is that they tend to mature over a much longer time: one to ten years.
Treasury Bonds, the longest term investment of all at more than ten years, are a fixed interest security as well and tend to enjoy much growth.
A Safe Investment Strategy
Of all the investment methods we’ve covered, this is widely considered to be one of the safest by far. The only thing that could prevent the payoff of a treasury investment would be the total and complete collapse and dissolution of the government involved. For this reason, it’s often a popular place to put money whenever the market itself is looking bad, especially if you get a fixed interest rate.
Just keep in mind that the price of Treasuries fluctuate with the federal interest rate, so for wealth creation, it’s best to buy when rates are high.
See you next week for part 17 of Investing.
Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 – 2009
{ 2 comments… read them below or add one }
Hi Sean,
This is another great strategy that I’ve never heard of. I like the look of Treasury Bonds. I’m looking for a safe place to put some money for a long period of time. I want to balance the safety aspect with making some money.
I don’t want it to be so safe that it doesn’t make any money but not so risky that I could lose it all. But you think that the Treasury Bonds have good growth so I’ll look into them.
I have heard of treasury bonds and I know they are traded in the US, how exactly I don’t know but I remember when learning to trade commodities that when gold and silver prices went down people then bought up treasury bonds. There was always this see saw effect.