Treasury Bond (T-Bond)
Candlefocus EditorT-bonds provide a modest rate of return, with the current rate set in advance at the time the bond is purchased. The interest payments are made twice annually, and when the bond matures, the original investment (the face value of the bond) is paid back to the investor.
Investors like T-bonds because they provide stability and predictability, as well as low credit risk. Long-term T-bonds are favored by investors looking for the security and predictability of a term of more than 10 years. However, for investors needing a sooner maturity date, T-bonds could be less attractive.
In addition to T-bonds, the U.S. Treasury also issues Treasury Bills (T-bills), Treasury Notes (T-notes), and Treasury Inflation-Protected Securities (TIPS). All these vehicle provide investors with a secure investment and predictable return, but with different maturities and interest rates.
Due to their almost-zero default risk and low volatility, T-bonds are an attractive choice for conservative investors looking for a secure long-term investment. Because of the long maturity dates, they also provide investors with capital gains potential, meaning that if the interest rate drops, investors will benefit. As with any investment, investors must weigh the benefits and risks of investing in T-bonds or any other security before making a financial commitment.