Where Can I Buy Bonds
This page focuses on buying for yourself or a child whose account is linked to yours. If you are planning to give a savings bond as a gift, also see our page on Giving savings bonds as gifts. You can print a certificate announcing your gift. See our selection of announcement cards.
where can i buy bonds
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In any one calendar year, you may buy up to $10,000 in Series EE electronic savings bonds AND up to $10,000 in Series I electronic savings bonds for yourself as owner of the bonds. That is in addition to the amount you can spend on buying savings bonds for a child or as gifts.
For example: If you want to buy $50 Series I savings bonds and you ask your employer to send $25 from each paycheck to your TreasuryDirect account, we issue a $50 bond for you after every other payday. You don't have to think about it again or do anything else. You keep getting more savings bonds automatically until you change or end your Payroll Savings Plan.
We may issue multiple bonds to fill your order. The bonds may be of different denominations. We use $50, $100, $200, $500, and $1,000 bonds. Again, the amount of your purchase can be any multiple of $50, from $50 to $5,000. You need to tell us only the amount. We determine denominations.
On Form 8888, you also specify who will own the bonds. That means, you can give paper savings bonds to yourself or to anyone else (as a gift). If you have enough money in your refund, you can buy multiple bonds and, if you wish, you can give them multiple registrations.
Series I savings bonds protect you from inflation. With an I bond, you earn both a fixed rate of interest and a rate that changes with inflation. Twice a year, we set the inflation rate for the next 6 months.
Learning how to buy bonds is an essential part of your education as an investor. A well-diversified portfolio should always strike a balance between stocks and bonds, helping you ride out volatility while still capturing growth along the way.
Buying individual bonds offers unique challenges. In addition to a wide range of moving parts inherent in each bond, the primary market can be difficult to access for all but the wealthiest investors. Meanwhile, the secondary market has less transparent pricing than primary issues.
The easiest way to buy bonds is to invest in bond mutual funds or bond exchange-traded funds (ETFs). Funds own large, diversified fixed-income portfolios comprising hundreds or even thousands of bonds.
Buying individual bonds via your brokerage account is more complicated. Typically online brokers offer access to bond secondary markets, which means that availability and prices wholly depend on existing holders looking to sell.
In addition to the Treasury, corporate, and municipal bonds described above, there are many other bonds that can be used strategically in a well-diversified, income-generating portfolio. Analyzing the yield of these bonds relative to U.S. Treasuries and relative to comparable bonds of the same type and maturity is key to understanding their risks.
Important Note: This website is not an offer to sell or the solicitation of an offer to purchase bonds or notes. Bonds or notes may only be purchased through a broker and through an official statement.
Buy U.S. Series I Savings Bonds with a portion or all of your tax refund for yourself or anyone. Issued by the Department of the Treasury, Series I bonds are low-risk bonds that grow in value for up to 30 years. While you own them they earn interest and protect you from inflation.
Just tell your tax preparer you want to buy savings bonds with part or all of your refund! If you prepare your own return using tax software, the computer program will guide you. If you file a paper return, use Form 8888, Allocation of Refund (Including Bond Purchases)PDF. The instructions explain what you need to do.
Part 2: The IRS will forward your request for savings bonds to the Treasury Retail Securities Site. It will take them up to three weeks to send your bonds to you at the address on your tax return. You can call the Treasury Retail Securities Site at 844-284-2676 to check on the status of your bond issuance.
The interest earned by purchasing and holding savings bonds is subject to federal tax at the time the bonds are redeemed. However, interest earned on savings bonds is not taxable at the state or local level.
These bonds are typically high-quality and very liquid. Most agency bonds are taxable at the federal and state level. Some are fully backed by the U.S. government, making their credit risk lower than other types of bonds.
These bonds are issued by companies, and their credit risk ranges over the whole spectrum. Interest from these bonds is taxable at both the federal and state levels. Because these bonds aren't as safe as government bonds, their yields are generally higher.
Generally, a bond that matures in one to three years is referred to as a short-term bond. Medium- or intermediate-term bonds are generally those that mature in four to 10 years, and long-term bonds are those with maturities greater than 10 years. Not all bonds reach maturity. Callable bonds, which allow the issuer to retire a bond before it matures, are common.
Savings bonds are also issued by the federal government and backed by the "full faith and credit" guarantee. Unlike many other types of bonds, only the person(s) in whose name a savings bond is registered can receive payment for it.
The two most common types of savings bonds are Series I and Series EE bonds. Both are accrual securities, meaning the interest you earn accrues monthly at a variable rate and is compounded semiannually. Interest income is paid out at redemption.
Most corporate bonds trade in the over-the-counter (OTC) market. TRACE, the Trade Reporting and Compliance Engine, provides real-time price information for corporate bonds. TRACE brings transparency to the fixed income market and helps create a level playing field for all market participants by providing comprehensive, real-time access to bond price information.
Agency securities are bonds issued by U.S. federal government agencies (other than the U.S. Treasury) or by GSEs. Most agency bonds pay a semiannual fixed coupon and are sold in a variety of increments, generally requiring a minimum initial investment of $10,000.
With the exception of bonds issued by Ginnie Mae, agency securities are not fully guaranteed by the U.S. government. The issuing agency will affect the strength of any guarantee provided on the agency bond. Evaluating an agency's credit rating before you invest should be standard procedure. Many credit rating agencies make this information available on their website.
Municipal bonds, or muni bonds, are issued by states, cities, counties, towns villages, interstate authorities, intrastate authorities and U.S. territories, possessions and commonwealths to support their obligations and those of their agencies. They are generally backed by taxes or revenues received by the issuer.
No two municipal bonds are created equal, which can make the muni bond illiquid. The Municipal Securities Rulemaking Board (MSRB) has educational information on muni bond investing, and its EMMA website has tools, data and disclosure documents to help compare and evaluate municipal securities.
You can purchase bonds issued by foreign governments and companies as another way to diversify your portfolio. Since information is often less reliable and more difficult to obtain for these bonds, you risk making decisions on incomplete or inaccurate information.
Like U.S. Treasurys, many international and emerging market bonds pay interest semiannually, although European bonds traditionally pay interest annually. Unlike U.S. Treasurys, however, there can be increased risks for U.S. investors who buy international and emerging market bonds, and buying and selling these bonds generally involves higher costs and requires the help of your firm or investment professional.
A bond fund is a mutual fund or exchange-traded fund that invests in bonds. These funds can contain all of one type of bond (municipal bonds, for instance) or a combination of bond types. Each bond fund is managed to achieve a stated investment objective.
Say the Fed raises the discount rate by .5 percent. The next time the U.S. Treasury holds an auction for new Treasury bonds, it will quite likely price its securities to reflect the higher interest rate. Those new bonds pay more interest. What happens to the Treasury bonds you bought a couple of months ago at the lower interest rate? They're not as attractive. If you want to sell them, you'll need to discount their price to a level that equals the coupon of all the new bonds just issued at the higher rate.
It works the other way, too. Say you bought a $1,000 bond with a 6 percent coupon a few years ago and decided to sell it three years later to pay for a trip to visit your ailing grandfather, except now, interest rates are at 4 percent. This bond is now quite attractive compared to other bonds out there, and you'd be able to sell it at a premium.
The tax rules that apply to bonds are complicated. Whether or not you will need to pay taxes on a bond's interest income (coupons) or a bond fund's dividends often depends on the entity that issued the bond. You might want to check with your tax advisor about the tax consequences before you invest.
Some bonds (often including those issued by industrial and utility companies) contain sinking fund provisions, which require a bond issuer to retire a certain number of bonds periodically. This can be accomplished in a variety of ways, including through purchases in the secondary market or forced purchases directly from bondholders at a predetermined price. That latter method is referred to as refunding risk. Refunding risk also leads to reinvestment risk (see below).
This is the risk that the yield on a bond will not keep pace with purchasing power. For instance, if you buy a five-year bond in which you can realize a coupon rate of 5 percent but the rate of inflation is 8 percent, the purchasing power of your bond interest has declined. All bonds but those that adjust for inflation, such as TIPS, expose you to some degree of inflation risk. 041b061a72