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About Government/Agency Bonds

How to Buy And Sell U.S. Treasury Securities

Treasuries can be bought and sold through an investment professional, a commercial bank or an on-line broker. They can provide you with the most recent issues that are trading in the secondary market. There often is no commission charged for buying or selling U.S. Treasury securities. Dealers earn a profit by buying bonds at one price and selling them at a slightly higher price.

Some individuals prefer to buy new issues directly from the government at auction through a Treasury Direct account with the U.S. Treasury. If you plan to sell Treasuries held in a Treasury Direct account, the Federal Reserve Bank of Chicago will sell your security in the secondary market for a fee; the process is the same with both a Legacy Treasury Direct account (through the Sell Direct program) and Treasury Direct program. If you use the Treasury Direct program to buy a security and wish to sell it through a dealer, you must arrange to move it out of your account with the U.S. Treasury. You can’t buy securities in the secondary market through the U.S. Treasury.

Investors may choose to invest in a mutual fund specializing in Treasuries. Some funds hold other fixed-income securities or derivatives along with Treasuries, so investors should be sure they understand the purpose of the fund and the makeup of its portfolio.

U.S. Savings Bonds may be purchased directly from the U.S. Treasury or from commercial banks and are often available through employee savings plans. The owner of a savings bond receives a registered certificate and, unlike other U.S. Treasury securities discussed in this guide, cannot resell or even give the bond away to another individual. When purchasing a U.S. Savings Bond as a gift, the recipient will be registered as the sole owner of the bond and it will not count towards your annual purchase limit, nor will you incur any tax liability.

 

All information and opinions contained in this publication were produced by the Securities Industry and Financial Markets Association from our membership and other sources believed by the Association to be accurate and reliable. By providing this general information, the Securities Industry and Financial Markets Association makes neither a recommendation as to the appropriateness of investing in fixed-income securities nor is it providing any specific investment advice for any particular investor. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and sources may be required to make informed investment decisions.