How to Buy Treasury Securities: Your Guide to Investing in U.S. Treasuries

Why Treasuries? The Investor’s Edge

Looking to park your money in a safe, government-backed investment? Treasury securities—think bills, notes, bonds, and more—are a go-to for investors seeking stability. Whether you’re eyeing Treasury bills (short-term), notes (mid-term), bonds (long-term), Floating Rate Notes (FRNs), or Treasury Inflation-Protected Securities (TIPS), there’s a way to buy in that fits your style. From the U.S. government’s own TreasuryDirect platform to brokerage accounts, here’s how to get started.

Key Takeaways

• TreasuryDirect: Buy new treasuries at auction, direct from Uncle Sam. Perfect for buy-and-hold fans.
• Early Exit: Transfer from TreasuryDirect to a broker if you need to sell before maturity.
• Brokerage Flexibility: ETFs, money market funds, and secondary market buys suit active investors.

TreasuryDirect: Your Gateway to Buying U.S. Treasuries Online

TreasuryDirect is the U.S. government’s one-stop digital hub where everyday investors can buy, manage, and cash in eligible Treasury securities—all without a broker. Run by the U.S. Department of the Treasury, this platform puts you in the driver’s seat, offering direct access to everything from savings bonds to Treasury bills, notes, bonds, Floating Rate Notes (FRNs), and Treasury Inflation-Protected Securities (TIPS).

Through TreasuryDirect, you can jump into Treasury debt auctions and snag securities straight from the source. It’s a streamlined, no-middleman way to invest in some of the safest assets around. But before you dive in, here’s what you need to know about setting up and using a TreasuryDirect account.

Getting Started: Account Setup and Rules

Opening a TreasuryDirect account is straightforward, but there are a few must-haves:

• Identification: You’ll need a valid Social Security Number (SSN) or Taxpayer Identification Number (TIN) to use the BuyDirect feature.
• U.S. Address: Only folks with a stateside address qualify—plus, you’ll need an active email.
• Bank Account: Link a checking or savings account to fund your purchases.
• Pick and Pay: Choose your security (type and term), decide how much to invest, and select your funding source.
• Timing: Schedule your buy—though dates depend on auction schedules or availability.

Once you’re in, purchases typically hit your account fast: savings bonds arrive within two business days, while bills, notes, bonds, FRNs, and TIPS land about a week after their auction closes. At maturity, you can even roll T-bills, notes, and bonds into new investments.

Investment Limits

• Savings Bonds: Start at $25 per person, with penny increments up to a $10,000 cap per year.
• Other Treasuries: Place noncompetitive bids from $100 up to $10 million, in $100 steps, for T-bills, notes, bonds, FRNs, and TIPS.

The Catch: Selling Before Maturity

Here’s the big caveat: TreasuryDirect doesn’t let you cash out early. If you need to sell before a security matures, you’ll have to transfer it to a brokerage account first, then offload it on the secondary market. It’s an extra hoop, but it keeps your options open.

Why TreasuryDirect?

This platform is perfect if you’re a buy-and-hold investor who loves cutting out fees and brokers. Whether you’re grabbing TIPS to hedge inflation or T-bills for a quick return, TreasuryDirect delivers a direct line to Uncle Sam’s debt offerings. Just be ready to commit—or have a broker on speed dial for an exit plan.

! Warning
Here’s a crucial catch: if you buy treasuries through TreasuryDirect, you’re locked in until they mature. No early redemption allowed. Want to sell before the finish line? You’ll need to move those securities to a brokerage account first, then offload them on the secondary market through your broker. It’s an extra step, so plan accordingly if flexibility’s your thing!

Treasury Auctions: How to Score Securities Straight from the Source

If you’ve got a TreasuryDirect account, you’re in the game for Treasury auctions—where the U.S. government dishes out billions in debt securities to eager buyers. In 2023 alone, 428 auctions moved a jaw-dropping $22 trillion in Treasury bills, notes, bonds, and more. Want in? Here’s how it works.

Auction Basics

Before each auction, the Treasury Department lays it all out: the date, the security type (think T-bills or bonds), how much is up for grabs, issue and maturity dates, terms, who can bid, and deadlines for throwing your hat in the ring. Whether you’re chasing a short-term bill or a long-haul bond, this is your shot to buy direct.

Bidding: Competitive vs. Noncompetitive

There are two ways to play:

• Noncompetitive Bids: The easy route for most folks. You say how much you want—up to $10 million—and you’re guaranteed to get it at the price set by the big players. No haggling, just a sure thing. Perfect for individual investors.
• Competitive Bids: The high-stakes option, usually for banks and big institutions. You name your desired discount rate, yield, or spread, but there’s no guarantee—you might get all, some, or none of what you bid for.

How It Goes Down

On auction day, the Treasury sifts through every bid to ensure they follow the rules. For noncompetitive bidders (likely you), just get your bid in by the cutoff time listed in the announcement—miss it, and you’re out. Once the dust settles, winning bids are locked in, securities land in your TreasuryDirect account, and the Treasury collects its cash from your linked bank.

Why It Matters

Auctions are your chance to grab treasuries at their birth, often at better rates than the secondary market. With noncompetitive bids capping at $10 million, it’s a level field for everyday investors—no Wall Street muscle required. Just keep an eye on those announcements, and you could be holding fresh-off-the-press U.S. debt in days.

! Important
Thinking of tapping a financial advisor to scoop up treasuries for your retirement nest egg? Heads up—any advisor you hire falls under the Retirement Security Rule. This regulation turns them into a fiduciary, meaning they’re legally bound to put your best interests first. Originally slated to kick in September 2024, the rule’s currently paused thanks to ongoing lawsuits, so stay tuned for updates if you’re going this route.

Buying Through Banks and Brokerages: More Ways to Own Treasuries

Beyond TreasuryDirect, banks and brokerages open up a world of options for snagging U.S. Treasury securities. Whether you’re into ETFs, money market funds, or the secondary market, here’s how to make it happen—plus tips on selling and more.

Treasury ETFs: Stock-Like Simplicity

Exchange-traded funds (ETFs) let you invest in treasuries as easily as buying stocks. Many brokers offer commission-free trades, making it a budget-friendly pick. You can target short-term T-bills, long-haul bonds, TIPS (inflation fighters), or FRNs (floating rates). Bonus: stash these ETFs in an IRA or other tax-advantaged retirement account for a smart, tax-efficient play.

Money Market Funds: Steady and Simple

Prefer a hands-off approach? Treasury money market mutual funds pool your cash into short-term treasuries, delivering low-risk returns tied to T-bill rates. Fees are typically slim, though yields stay modest. The U.S. Treasury’s Office of Financial Research keeps tabs on these funds, tracking their moves across the industry and big players.

Secondary Market: Buy Used, Sell Easy

Most top brokerages—think Fidelity or Schwab—give you access to the bond market, where you can buy treasuries already in circulation. Fees vary, but the best platforms offer free Treasury bond trades. These secondhand bonds can slot into IRAs or tax-free accounts, and they’re a breeze to sell later—no maturity wait required. It’s a flexible way to jump in or cash out.

Top Online Brokers to Consider

Here’s a quick rundown of standout brokerages, based on independent reviews:

• Fidelity Investments: Best overall and for low costs. No account minimum, $0 stock/ETF trades, $0.65 per options contract. Rating: 4.8/5.
• TD Ameritrade: Great for beginners, killer mobile app. $0 minimum, $0 stock/ETF trades, $0.65 per options contract. Rating: 4.5/5.
• tastytrade: Options trading champ. $0 minimum, $0 stock/ETF trades, $1 to open options, $0 to close. Rating: 3.8/5.
• Interactive Brokers: Advanced traders’ pick, global reach. $0 minimum, $0 for IBKR Lite, up to $0.005/share for Pro. Rating: 4.6/5.
• Charles Schwab: ETF king. $0 minimum, $0 stock/ETF trades, $0.65 per options contract. Rating: 4.7/5.

Note: We pick top products independently—advertisers don’t sway us. We might earn a commission if you use our recommended partners. Check our disclosure for details.

Selling Treasuries: What to Know

Holding treasuries in TreasuryDirect and want out? You’ll need to transfer them to a bank or broker first using a Transfer Request Form, then place a sell order. For savings bonds, it’s simpler—redeem them online (full or partial), and choose where the cash lands. Broker-held treasuries? Just hit sell—no transfer hassle.

Quick Q&A

• Short-Term T-Bills: Buy them on TreasuryDirect or through a bank/broker. Noncompetitive bids cap at $10 million; competitive bids can hit 35% of the auction amount.
• Canadian T-Bills: U.S. investors can grab these via brokers or financial institutions, starting at CA$1,000.

FAQs: Your Treasury Questions Answered

Why Treasuries Matter

Treasuries are a portfolio’s safety net—low risk, liquid, and backed by the U.S. government’s full promise. They’re gold for retirement, offering steady income and diversification. Whether you’re buying through a broker or direct, they’re a smart move for stability in shaky times.