Table of Contents
Investors can buy Treasury bills, bonds, and notes in a few ways, including through TreasuryDirect, through a broker or bank, or even through an exchange-traded fund (ETF) or mutual fund. Treasury bills, bonds, and notes are stable and low-risk investments that can be a key part of a diverse investment portfolio. Learning how to purchase Treasurys may be important, regardless of your experience level with fixed-income investments.
With the full faith and credit of the U.S. government behind them, these government-issued securities are among the least risky investment options out there. We’ll explore the principles of buying Treasury bills, bonds, and notes in this article.
Key Points
• Treasury bills, bonds, and notes can be purchased through TreasuryDirect, banks, or brokers.
• These securities are backed by the full faith and credit of the U.S. government, making them low-risk investments.
• Investors can also gain exposure to Treasury securities indirectly through ETFs or mutual funds.
• TreasuryDirect allows direct purchases without a broker, which may save on transaction costs.
• Investing in Treasury securities through ETFs and mutual funds offers ease and diversification.
How Can You Buy US Treasurys?
Both individual and institutional investors can invest in U.S. Treasury bonds through a variety of methods. Getting them straight from the U.S. Department of the Treasury through their web portal, TreasuryDirect, is one of the simplest ways to do so.
With the use of this platform, investors can purchase Treasury bills, bonds, and notes straight from the government. Alternatively, investors can purchase Treasurys via financial institutions. Treasury securities are accessible through a number of brokerages, many of which also offer a variety of services and choices to help investors make purchases.
Investors can also gain access to Treasury assets through mutual funds, exchange-traded funds (ETFs), or investment vehicles dedicated to Treasury securities. These allow investors to have diversified exposure to Treasurys in a single investment instrument.
1. Direct Through TreasuryDirect
The U.S. Department of the Treasury offers an online platform called TreasuryDirect for investors who want direct access to U.S. Treasury securities. People can take part in Treasury auctions, which are public sales of recently issued securities, through TreasuryDirect.
Pros
• Buying Treasury securities directly from TreasuryDirect may avoid transaction fees by eliminating the need for a brokerage middleman.
• With capabilities such as managing maturing securities and reinvesting interest, investors can manage their Treasury holdings through the site.
Cons
• TreasuryDirect may offer a less user-friendly interface than typical online brokers.
• TreasuryDirect may have less customer service available in comparison to brokerage firms.
Purchasing Limits
Purchase restrictions may apply, limiting the quantity of Treasury securities that a person can acquire in a given period of time. The minimum amount that you can purchase of any given Treasury bill, note, bond, Treasury Inflation-Protected Security (TIPS), or Floating Range Note (FRN) is $100. Additional amounts must be in multiples of $100. The maximum amount of Treasury bills that you can buy in a single auction is $10 million if the bids are noncompetitive, or 35% of the offering amount for competitive bids.
2. Broker or Bank
Investors can buy U.S. Treasury bonds through banks or brokerage houses, which provide access to secondary market transactions as well as primary market Treasury auctions.
Pros
• Banks and brokers typically offer extra support and services, such as financial advice, research tools, and customer help.
• Certain brokerage houses give investors access to the primary and secondary markets, giving them a wide selection of Treasury securities and investment choices.
Cons
• Transaction fees and costs associated with using a bank or broker may increase the total cost of investing in Treasurys.
• In the rare event that a financial institution fails, treasury investors would need to rely on either Federal Deposit Insurance Corporation (FDIC) insurance (in the case of insured banks) or Securities Investor Protection Corporation (SIPC) insurance (in the case of insured brokerages) to recover losses up to the insurance providers’ limits.
Purchasing Limits
Purchasing restrictions may apply, depending on the bank’s or brokerage company’s specific policies.
3. ETFs and Mutual Funds
Investments in mutual funds or ETFs with a Treasury concentration are an option for investors who want exposure to U.S. Treasurys without having to buy individual securities directly. These investment vehicles combine money from many individual investors and use it to buy a variety of Treasury securities.
Pros
• ETFs and mutual funds provide investors with a diverse portfolio of Treasurys with a single investment, which is one of their main benefits.
• Mutual funds and ETFs provide liquidity, enabling investors to purchase and sell shares on the secondary market at any time during the trading day.
• The ease of use and accessibility of ETFs and mutual funds, which provide investors with a diverse portfolio of Treasurys with a single investment, is one of their main benefits.
Cons
• Particularly for long-term investors, expense ratios and management fees associated with mutual funds and ETFs can gradually reduce returns. The costs of purchasing and selling securities inside the fund, such as brokerage commissions and bid-ask gaps, are indirectly paid for by investors.
• While mutual funds and ETFs provide diversification and are relatively low-risk, they carry the risk of market volatility and possible losses.
• Interest earned on Treasury securities owned are generally exempt from state and local taxes, though they are subject to federal taxation. In the case of Treasury funds, investors may also owe capital gains taxes when fund shares are sold for a profit. This may not be a con, per se, depending on an investor’s circumstances, but it’s a consideration.
Purchasing Limits
ETFs usually have no minimum investment limits, making them widely accessible. There may be minimum initial investment restrictions for mutual funds, which could prevent certain individuals from participating. Ongoing mutual fund contributions, however, are frequently flexible, enabling investors to gradually make lower installments.
Start investing with up to $3,000 in stock.
For a limited time only, open and fund a SoFi Active Invest account and get up to $3,000 in stock.
Offer ends 8/16/26*.
Portfolio Considerations When Buying Treasury
When incorporating U.S. Treasurys into a portfolio, investors should consider several key factors to help optimize their investment strategy. Due to their low correlation with other asset classes, Treasurys may offer stability and diversification within a portfolio. They are frequently seen as a safe haven investment, especially in volatile markets or uncertain economic times, though it’s important to remember that no investment is completely safe.
Treasury and ETF Ladders
Using Treasury bill (T-bill) and Treasury bond (T-bond) ladders is one way to potentially optimize overall yield while managing risk Treasurys. Buying T-bills with staggered maturities — typically a few weeks to a year — is known as a T-bill ladder. Because T-bills mature on a regular basis, this strategy offers investors a consistent flow of income and liquidity, allowing them to reinvest the proceeds or access cash as needed. T-bond ladders, on the other hand, are a way to spread out interest rate risk and keep exposure to longer-term rates by buying Treasury bonds with different maturities.
Investing in a group of Treasury-focused ETFs with staggered durations is known as an ETF ladder. ETF ladders enable investors to manage interest rate risk and take advantage of a variety of yields.
Whichever strategy is chosen, adding Treasurys to a portfolio may help investors balance their overall portfolio’s exposure to market risk, especially for investors who prioritize income generation and capital protection.
The Takeaway
TreasuryDirect, financial institutions, and investment funds are a few ways to buy or gain exposure to U.S. Treasury securities. Additionally, investors may consider utilizing T-bond and T-bill ladders or ETF ladders that effectively scaffold the maturity dates of Treasury securities, which can create a steady income stream and help manage interest rate risk. Overall, Treasury securities are a low-risk investment that can be an effective way to diversify your portfolio.
Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest®. You can trade stocks, ETFs, or options through self-directed investing with SoFi Securities, or simply automate your investments with a robo advisor from SoFi Wealth. You'll gain access to alternative investments and upcoming IPOs, and can plan for retirement with a tax-advantaged IRA. With SoFi, you can manage all your investments, all in one place.
Take a step toward reaching your financial goals with SoFi Invest.
FAQ
How do I buy Treasury notes and bonds?
A few of the most common ways that investors buy Treasurys are through TreasuryDirect.gov, a bank, a broker, or a dealer. Both individual and institutional investors can buy directly from the government through TreasuryDirect, but various financial institutions and brokerage houses will act as intermediaries.
Do you pay taxes on T-bills?
Yes, interest earned on Treasury bills (T-bills) is taxable as ordinary income on federal income taxes. However, they are exempt from state and local taxes, making them attractive to investors from high-tax states. Gains realized by selling Treasury fund shares, however, are subject to capital gains taxes.
What happens when a T-bill matures?
When a T-bill matures, you are paid its face value. You can hold a bill until it matures, or you can sell it before it matures.
Photo credit: iStock/kate_sept2004
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.
Exchange Traded Funds (ETFs): Before investing in Exchange Traded Funds (ETF), always read the fund's prospectus. It contains important information about the fund’s objectives, risks, and fees. You can get a prospectus from the fund company’s website or by emailing our customer service at [email protected].
Mutual Funds (MFs): Investors should read and carefully consider the information contained in the prospectus, which contains the Mutual Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or SoFi's customer service at: 1.855.456.7634. Mutual Funds must be bought and sold at NAV (Net Asset Value); unless otherwise noted in the prospectus, trades are only done once per day after the markets close. Investment returns are subject to risks. Shares may be worth more or less their original value when redeemed. The diversification of a mutual fund will not protect against loss. A mutual fund may not achieve its stated investment objective. Rebalancing and other activities within the fund may have tax implications.
Investment Risk: Diversification can help reduce some investment risk, but cannot guarantee profit nor fully protect in a down market.
Options involve substantial risk of loss and the possibility an investor may lose the entire amount invested. Before starting options trading, investors should be familiar with the Characteristics and Risks of Standardized Options . TTax implications with options should be considered. Consult your tax advisor to understand any impacts to your taxes.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
SOIN-Q126-146