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How to Buy US Treasury Bonds (Ameritrade, Fidelity, and more)

Bonds are a great way to balance your portfolio and manage risk. Even the Buffet method of investing recommends 30% of your investments be in bonds. One of the main questions I get around this investment is how to buy US Treasury Bonds. And also if they’re even a good investment today!

US Treasury Bonds are popular because of their safety, and are one of the most common fixed income investments. They’re especially nice for their consistent, steady payments, and full return of the principal invested at maturity. 

So how do you buy US Treasury Bonds? How much does it cost? Are they worth the time, effort, and the money? Or should you just avoid them entirely?

Read on to find out just how easy it is to put your money into this stable investment vehicle.

This article was written by our staff writer, Lindsey Smith!

How do I buy US Treasury bonds? And is it a good investment right now?How Do I Buy US Treasury Bonds?

Alright, so we’ll get right to it with your questions. “How do I buy US Treasury Bonds?”

There are several ways you can buy a US Treasury Bond

TreasuryDirect is an online platform run by a branch of the US Treasury Department. It holds auctions where you can bid competitively or non-competitively.

A competitive bid states the price you’re willing to pay and the yield you expect, whereas a non-competitive simply buys the bond at the price listed. 

This platform is easy to navigate and all you need to do is set up an account to access the BuyDirect system. A nice feature is the “schedule repeat purchases” option, where it can automatically reinvest once the bond has matured.

There is a minimum purchase amount of $25 on the platform, or $100 for Treasury Bonds, where you can bid in $100 increments.

You can also purchase through a bank or a broker, or use an online brokerage.

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How to Buy US Treasury Bonds on Fidelity

Many people prefer to buy their US treasury bonds through an online broker. One of the most popular is Fidelity (later, we’ll also cover how to invest in US treasury bonds with eTrade, TD Ameritrade, and Schwab – just to make sure we cover all the bases!).

Buying a US Treasury Bond on Fidelity is similar to buying a stock or ETF

Click the News and Research tab, and then Fixed Income Bonds and CDs. This will take you to a page where you can select different types of bonds. You’ll then want to decide on the maturity date you’re looking for (we’ll discuss how to buy a 10 year US Treasury Bond as a standard since it’s both a long-term hold and a competitive yield).

Click on whichever term you decide on (for the term), and you’ll be taken to a new page with a list of different bonds you can purchase. Have a look at the coupon rate – this is the dividend yield the bond is currently paying. If it is higher than the overall yield the bond is sold at a premium. Which means you’ll pay more than par, or $100, for the bond. 

When you buy bonds with Fidelity, there is a minimum amount you need to buy, so you’ll need to have enough to cover at least the minimum amount.

And then it’s as easy as just clicking ‘buy’!

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How to invest How to Buy US Treasury Bonds on eTrade

To buy a US Treasury Bond on eTrade, click on trade, and then click bonds.

Across the top you can choose different types, so you’ll want to pick ‘Treasury’, and then decide whether you’re looking for bills, notes, bonds, or TIPS.

From there, you can search by maturity dates, yield, and whether or not it’s callable. This will populate a list of bonds that match your search criteria.

When you click one it will show you all of the information about the bond, and then you click “preview order” to buy.

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How to Buy US Treasury Bonds on TD Ameritrade

To buy a US Treasury Bond on TD Ameritrade, choose Research and Ideas from the top of the page and then Bonds and CDs.

On the left you can do a quick or advanced search if you know what you’re looking for. If you don’t, click the button that says “find individual bonds”, which will take you to a bond wizard (not literally of course! ;)).

This will prompt you to answer several questions about what you’re looking for, such as:

  • the type of account you’re purchasing the bond for,
  • tax status,
  • maturity length,
  • how much you have to invest,
  • and what type of bond you prefer (where you’ll choose Treasury).

This will create a list for you to choose from. When you click one, it will show you all the information and the minimum amount you have to buy, as well as help you calculate the total price.

Then you just click buy!

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How to Buy US Treasury Bonds on Schwab

To buy a US Treasury Bond at Schwab, first you’ll need to consent to their terms of service, which extensively outlines negative bond yields.

We are wanting to stay away from those anyway, so click your acceptance.

Next, choose Treasury from the drop down menu and fill out the fields you know, such as…

  • maturity date,
  • Treasury bond,
  • and then click “search results”.

A list will be created and like the other platforms, when you click on one it will show you all the information for that bond.

Then click buy!

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Piggy bank with moneyHow Do I Buy a 10 Year Treasury Bond?

If you’re wondering, “How do I buy a 10-year Treasury Bond?”, you’ll want to refer to all the notes above. Each section on the Fidelity, eTrade, TD Ameritrade, and Schwab will guide you on how to buy a 10 years Treasury Bond.

If you’d rather work with a physical broker, you can do that. They’ll certainly help you. 

Or, if you want to work with a bank, you can go that route too!

How to Buy US Treasury Bonds ETF

Another great way to invest in US Treasury Bonds is through Fixed Income ETFs. They trade easily and offer diversification over just buying single bonds.

You’ll want to decide whether you specifically want one type of fixed income investment in your ETF (such as all bonds, or all CDs), or a variety of different types with various maturities. This is a good diversification strategy that is similar to creating a bond ladder.

Sticking to our example, let’s say you want to invest in US Treasury Bonds with a maturity rate of 10-12 years. You can try to find an ETF that matches that criteria. Or you can find an ETF that holds that as well as other fixed income assets, such as riskier high yield or junk bonds.

Because US Treasury Bonds are stable, you can have a little room for risk within the ETF, while still spreading that risk out.

Related: How to Buy STI Index (What Is It? And What’s the Dividend?) 

The downside of US Treasury Bond ETFs

The downside to US Treasury Bond ETFs is that they don’t necessarily include the benefits of investing in a single bond.

  • When you invest in a single bond, the bond issuer provides steady, consistent interest payments, and your principal will be returned when the bond matures.
  • An ETF might offer consistent dividend payments, but the amount will vary because the funds included are all different.
  • Also, the value of the ETF may rise and fall based on interest rates rising and falling, though this is true of purchasing single bonds as well.

ETFs are great for diversification, and they’re a great option if you don’t have the minimum amount needed to purchase individual bonds. 

banksWhat Banks Sell Treasury Bills?

Wondering what banks sell Treasury Bonds?

You can buy Treasury Bills from any bank.

If your bank is where you broker your investments, it’s a nice, simple way of keeping all your investments together.

However, you can also buy them through a broker, investment platform, or through TreasuryDirect.

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How Much Does It Cost to Buy a Treasury Bond?

It’s a fair question. How much do Treasury Bonds cost these days?

Unlike stocks, there isn’t a huge difference in price with bonds. Par is $100, the face value that US Treasury Bonds sell for.

If the coupon rate is higher than the interest rate, they will add a premium. So, if a coupon price is paying 5.25% and the interest on the bond is only 1.4%, you’ll pay more per bond than $100. 

This is something to pay attention to, since you may not get repaid the premium price. Sometimes you’ll only be promised to be paid back par at maturity, and sometimes the coupon rate will fall you’ll be paid par, thus buying at a premium but only getting back face value.

You definitely don’t want to lose that principal in the long run.

US Treasury Bond Rates

What is the current US Treasury Bond rate?

At the point of writing this article, the current US Treasury Bond Yield is 1.40% on a 10 year bond, and 1.81% on a 30 year bond, according to Bloomberg.

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safe to buy US Treasury BondsIs It Safe to Buy US Treasury Bonds?

What’s the risk factor like on bonds? Is it safe to buy US Treasury Bonds?

Investors normally purchase treasuries because they’re considered to be safe investments. 

That safer reputation is because the interest payments and return on investment principal is guaranteed by the US government. In fact, US Treasury Bonds are considered so safe they’re often referred to as the risk-free investment. This isn’t quite true though, as no investment is without any risk.

There is a default risk, when some countries have trouble paying their bills at times. But the more important risk is interest-rate risk. This happens if you want your money back before maturity. In this case, you need to sell the Treasury Bond at its current market price, which means you may get less than what you put in, an especially likely scenario if interest rates have gone up since you purchased the bond.

So yes, they are considered safe because there is a “contractual promise of repayment”. However, that doesn’t mean they’re without risk, especially right now with interest rates rising.

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How to Buy US Treasury Bonds – Is It Right For You?

You’re reading this article because you were wondering how to buy US Treasury Bonds. But…the next question you might want to ask yourself is…”Should you?”. The interest rate is low and inflation is high. Is it really the best place for your money? 

Only you can answer that question for yourself and your situation.

How to Buy US Treasury Bonds – In Summary

Buying a US Treasury Bond is a straightforward process. Pick who you’d like to invest through – whether it’s an online or in-person brokerage, bank, or TreasuryDirect. Create your account if you don’t have one already.

Decide the details of your investment, such as the length of time. Search and find the bond or ETF that works best for you, and purchase.

Measure the risks and benefits of holding US Treasury Bonds, and what percentage of your overall portfolio you want it to occupy. Generally the younger you are, the more risk you can take, so you might have a smaller portion in bonds. Whereas, if you’re older, you might want less risk and more stability, and so you’ll find a bigger portion of your investment going to bonds. 

What is the best option for you? Are you interested in buying US Treasury Bonds? Why or why not?

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AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

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