Should I Buy U.S. Treasury Bonds Now? Are They Taxable? Are They Safe?

Treasury Bonds are gaining interest from investors that are seeking out safe investments ahead of a possible recession.

Several U.S. Treasury Bonds stacked on each other.
Source: larry1235 / Shutterstock.com

So what are Treasury Bonds and should investors buy them now? Let’s go over everything potential investors need to know about the U.S. Government-backed debt!

What Are Treasury Bonds?

Treasury Bonds are a type of debt issued by the U.S. Government to back its own spending activity. To put it simply, the holder is lending money to the government. These bonds are sold via auctions every month with trades taking place on a secondary market afterward.

Are Treasury Bonds Taxable?

Treasury Bonds have long maturity periods ranging from 20 years to 30 years. During that time, the holder of the bond receives semiannual interest payments. They also get the face value of the bond back once it’s reached maturity. Only the interest payments are taxed and only at the federal level.

Are Treasury Bonds Safe?

Treasury Bonds are one of the few risk-free investments out there. That’s because the U.S. Government stands behind them and is able to pay the interest due to taxes. Basically, there should be no worries about Treasury Bonds carrying risk unless the U.S. Government itself is at threat of toppling.

Are Treasury Bonds A Good Investment?

That’s a trickier question to answer. Yes, they are without risk and do have guaranteed yields. However, those yields are incredibly low. That means investors might consider other investments first with Treasury Bonds as a side investment for some guaranteed profits, no matter how small they may be.

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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2022/03/should-i-buy-u-s-treasury-bonds-now-are-they-taxable-are-they-safe/.

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