Investors can purchase U.S. Treasury securities through several convenient methods. Available options include Treasury bills (T-bills), Treasury notes (T-notes), Treasury bonds (T-bonds), Floating Rate Notes (FRNs), and Treasury Inflation-Protected Securities (TIPS), each designed to meet different investment goals and time horizons.
Those with brokerage accounts can gain exposure to Treasuries by buying individual securities on the secondary market, investing in Treasury-focused exchange-traded funds (ETFs), or choosing Treasury money market funds. Investors who prefer to purchase directly from the U.S. government can do so through the TreasuryDirect platform, which offers access to newly issued Treasury securities without using a broker.
Understanding TreasuryDirect: How It Works
Understanding TreasuryDirect
TreasuryDirect is the U.S. Department of the Treasury's official online platform that allows investors to purchase, hold, manage, and redeem eligible Treasury securities electronically. By using TreasuryDirect, individuals can buy government-backed investments directly from the U.S. Treasury without going through a broker or financial institution.
Through TreasuryDirect, investors can participate in Treasury auctions and purchase a variety of securities, including Treasury bills (T-bills), Treasury notes (T-notes), Treasury bonds (T-bonds), Floating Rate Notes (FRNs), Treasury Inflation-Protected Securities (TIPS), and U.S. Savings Bonds.
TreasuryDirect Account Requirements
To open a TreasuryDirect account, investors generally must:
- Have a valid Social Security Number (SSN) or Taxpayer Identification Number (TIN).
- Maintain a U.S. residential address and a valid email address.
- Link an eligible U.S. checking or savings account for funding purchases and receiving payments.
Buying Treasury Securities Through TreasuryDirect
Once an account is created, investors can:
- Select the type of Treasury security and its maturity period.
- Choose the investment amount and funding source.
- Schedule purchases based on available Treasury auction dates.
Most savings bonds are issued to a TreasuryDirect account within two business days after purchase, while Treasury bills, notes, bonds, FRNs, and TIPS are typically issued within about one week following the auction date.
Investment Limits
TreasuryDirect also offers flexible investment options:
- U.S. Savings Bonds require a minimum investment of $25 and can generally be purchased in amounts up to $10,000 per person annually.
- Treasury bills, notes, bonds, FRNs, and TIPS have a minimum noncompetitive bid of $100, with additional purchases made in $100 increments, up to $10 million per auction.
How Much Can You Invest in Treasury Bills?
Individual investors can purchase up to $10 million in Treasury bills through a single auction when submitting noncompetitive bids. For competitive bids, the maximum purchase is limited to 35% of the total offering amount, subject to U.S. Treasury auction rules.
How to Buy and Sell Short-Term Treasury Bills
Investors can purchase short-term Treasury bills (T-bills) directly through TreasuryDirect, the U.S. government's official platform for buying Treasury securities. They can also buy and sell Treasury bills through banks, brokerage firms, or on the secondary market using a brokerage account.
Understanding U.S. Treasury Auctions
TreasuryDirect account holders can participate in U.S. Treasury auctions, where the government issues new Treasury securities to raise funds. Before each auction, the U.S. Department of the Treasury publishes key details, including the auction date, security type, issue and maturity dates, offering amount, eligibility requirements, and deadlines for submitting bids.
Investors can choose between noncompetitive and competitive bids. A noncompetitive bid guarantees that the investor will receive the requested amount of securities—up to $10 million—at the yield determined during the auction. Competitive bids, on the other hand, allow investors to specify the desired yield or discount rate, but there is no guarantee the entire order will be filled. Because of this, competitive bidding is primarily used by banks, investment firms, and other institutional investors.
Once the auction closes, the Treasury reviews all submitted bids to ensure they comply with auction rules. Eligible noncompetitive bids received before the deadline are accepted, and the purchased securities are deposited into the investor's TreasuryDirect account. Payment is then automatically collected from the linked bank account, completing the transaction.
➽Important: Investors who seek professional advice when purchasing Treasury securities for a retirement account should know that financial advisors may be subject to the Retirement Security Rule, which requires them to act as fiduciaries and place their clients' best interests first. However, although the rule was originally scheduled to take effect in September 2024, its implementation is currently on hold while legal challenges are being resolved.
How to Buy Treasury Securities Through Banks and Brokerages
Exchange-Traded Funds (ETFs)
Investors who prefer a more flexible approach can gain exposure to U.S. Treasury securities through Treasury-focused exchange-traded funds (ETFs). These funds trade on stock exchanges like individual stocks, and many brokerage platforms offer commission-free ETF trading. Treasury ETFs are available with exposure to short-term Treasuries, long-term Treasuries, Treasury Inflation-Protected Securities (TIPS), and Floating Rate Notes (FRNs). They can also be held in IRAs and other tax-advantaged retirement accounts.
Treasury Money Market Funds
Another option is investing in Treasury money market mutual funds, which primarily hold short-term U.S. Treasury securities. These funds are designed to provide stability and liquidity, although their returns generally reflect the relatively low yields of short-term Treasury bills. They may be suitable for investors seeking a low-risk place to hold cash.
Buying Treasuries on the Secondary Market
Many banks and brokerage firms provide direct access to the secondary bond market, allowing investors to purchase previously issued Treasury securities. While brokerage fees vary by provider, many platforms now offer commission-free trading for U.S. Treasury bonds. Securities purchased on the secondary market can also be held in IRAs and other retirement accounts. In addition, buying through a brokerage makes it easier to sell Treasury securities before maturity if needed, providing greater flexibility than purchasing directly through TreasuryDirect.
How to Sell U.S. Treasury Securities
If your marketable Treasury securities are held in a TreasuryDirect account, they cannot be sold directly through the platform. Instead, you must first transfer them to an eligible bank, brokerage, or securities dealer, where they can be sold on the secondary market. This process requires submitting a Transfer Request Form before the transfer can be completed.
For U.S. Savings Bonds held in TreasuryDirect, investors can redeem them electronically through their online account. Depending on eligibility, you can choose either a full or partial redemption and specify the bank account where the proceeds should be deposited.
Note: Product recommendations and reviews are often created through independent evaluation processes. In some cases, publishers may receive compensation from advertising partners, but this does not necessarily influence their editorial recommendations.
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How to Buy Canadian Treasury Bills
Individuals can purchase Canadian Treasury bills through a bank, financial institution, or licensed brokerage firm. The minimum investment required to buy a Canadian Treasury bill is CA$1,000.
The Bottom Line
U.S. Treasury securities are a valuable addition to a diversified investment portfolio, offering stability, liquidity, and a relatively low level of risk. Backed by the full faith and credit of the U.S. government, they are widely regarded as one of the safest investment options available.
Treasuries can play an important role in retirement planning by providing steady income and helping reduce overall portfolio volatility. Investors can purchase them directly through TreasuryDirect or buy and sell them through banks, brokerage firms, and the secondary market, depending on their investment goals and liquidity needs.
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