{"id":273,"date":"2022-04-04T13:15:30","date_gmt":"2022-04-04T13:15:30","guid":{"rendered":"https:\/\/dorseyentertains.com\/?p=273"},"modified":"2025-01-03T10:28:32","modified_gmt":"2025-01-03T10:28:32","slug":"treasury-direct-bonds","status":"publish","type":"post","link":"https:\/\/dorseyentertains.com\/index.php\/2022\/04\/04\/treasury-direct-bonds\/","title":{"rendered":"Treasury Direct Bonds"},"content":{"rendered":"

What ultra-safe investment is currently paying a high interest rate? The answer is certain Treasury Direct bonds. \u00a0For instance, inflation-indexed Series I<\/a> bonds issued from November 2021 to April 2022 are paying 7.12 percent for the first six months. Interest is a combination of a fixed rate and an inflation rate. While the fixed rate is annual, the inflation rate may change every six months. If the inflation rate remains high, so will the yield. Compare that with the extremely low rates offered on other safe investments such as certificates of deposit<\/a> and savings accounts. For that reason, the sale of Series I bonds is booming.<\/p>\n

\"Treasury<\/p>\n

What are Treasury Direct Bonds?<\/h2>\n

Treasury bonds are government debt securities. Issued by the federal government, they are sold by the U.S. Treasury Department. Interest on treasury bonds is exempt from state and local taxes.<\/p>\n

These bonds are sold on TreasuryDirect.gov<\/a> which is managed by the Bureau of Fiscal Service. \u00a0Because the U.S. government issues Treasury Direct bonds, they are risk-free.<\/p>\n

Treasury bonds, issued for terms of 20 or 30 years, pay interest every six months until maturity. At maturity, bond owners receive the face value. Note that once bonds mature, they no longer pay interest. Prices and yields of treasury bonds are determined at auction.<\/p>\n

The series EE bonds, long a college savings favorite, earn a fixed rate of interest. These bonds are guaranteed to double in 20 years. In contrast, there is no guarantee that an I bond will grow to a specified amount.<\/p>\n

In the past, Treasury bonds were issued in paper form. Now, Treasury bonds are all issued electronically.<\/p>\n

How to Buy Treasury Direct Bonds<\/h2>\n

Purchase Treasury Direct bonds via TreasuryDirect.gov or from banks or brokers<\/a>. Before buying bonds, you must set up an account. A personal checking or savings account is necessary to pay for bonds through TreasuryDirect. Such an account is also required to accept funds upon bond redemption.<\/p>\n

As the New York Times<\/em><\/a> notes, the TreasuryDirect website needs updating. While users submit bank information when signing up, changing that bank account later requires the use of a paper form. To make the change, users must print out a form and take it to their bank or credit union for bank officer certification. It is then mailed to a U.S. Treasury post office address in Minneapolis. It generally takes about 10 business days after form receipt for an updating of the TreasuryDirect account.<\/p>\n

While TreasuryDirect representatives say that a modernization is underway that will permit users to change bank accounts without resorting to paper forms, no timetable was given. For now, if you want to set up an account to buy Treasury Direct bonds, choose a checking or savings account you plan to keep for a long time to avoid this hassle.<\/p>\n

Buy Treasury Direct Bonds With Your Tax Refund<\/h2>\n

Expecting a federal or state tax refund? You can have that amount directed to your TreasuryDirect account by requesting the IRS or your state tax department to deposit your refund there. Purchase savings bonds once you receive the funds.<\/p>\n

On your tax return, simply add the TreasuryDirect routing number, 051736158, in the routing number field. In the account number field, add your TreasuryDirect account number. For \u201caccount type,\u201d choose Savings.<\/p>\n

Competitive vs. Non-competitive Bids<\/h2>\n

Two types of bids are used at Treasury bond auctions. With non-competitive bids, the purchaser agrees to the interest rate<\/a> determined at auction. The buyer receives the bonds they want at the full amount desired. Virtually all individual investors go the non-competitive route.<\/p>\n

With competitive bids, the buyer specifies an acceptable yield. The result is:<\/p>\n