How to Invest in Treasury Bonds
- 1). Open an account with the United States Treasury Department online. You can go to their website and set up a user account with which you can buy bonds. To set up an account, you simply fill out a form with your basic personal information. You can then fund the account with the amount that you would like to invest.
- 2). Submit a noncompetitive bid through the Treasury Direct account system. With this process, you are not competing against anyone else for a particular Treasury security. Instead, you simply specify which security you want in the amount that you want to buy. Then the rate will be assigned to the Treasury bond after an auction. With this method, you do not have any control over what rate of return you receive.
- 3). Submit a competitive bid through the bidding system. With this process, you actually bid on Treasury bonds against other investors. You specify what discount rate you would be willing to accept if you won the bid. By using this method, you are not guaranteed the purchase of any securities. If you do win the bid, you get the rate of return that you specified in your bid. This can give you some level of control over your investment, but you are not certain to receive it. If you want to use the competitive bidding system, you have to go through a broker, a dealer or a bank. Your representative will be able to guide you through the bidding process easily.
- 4). Set up a reinvestment into the same types of securities that you have already purchased through the Treasury Direct system. Once you secure some bonds from the United States Treasury, you can periodically reinvest into the same type of security again automatically. This makes the process much easier and it allows you to increase your investment holdings.
