Safety.
Treasuries are seen
as safe and secure investments.
"They're backed by the
federal government,"
says Barry Picker, partner
in Picker, Weinberg
& Auerbach CPAs. "If
they can't pay it, we're
in trouble."
Protection.
Principal is protected.
Unlike investments,
you are guaranteed to
get back your principal
if you hold Treasuries
until they mature.
Tax break. Interest is exempt from state taxes. That often makes them a favorite for people living in areas with high state income taxes.
Guaranteed
return. The day
you invest, you know
when they mature and
your rate of return.
Regularity. Notes and bonds pay interest every six months. So you know you'll get that regular income.
Minimum investments. Treasuries require larger amounts of cash. With T-bills, for example, you need at least $1,000.
Not liquid. If you sell early, you're at the mercy of the market.
Long term only. Notes and bonds are a long-term investment. Notes go two to 10 years; bonds for 10 to 30.
Weak
investment. You
may be able to get a
better return from other
savings or investment
vehicles.
Generally,
"Treasuries appeal
to retirees and people looking
for a little income and
a safe investment,"
says Barry Picker, partner
in New York-based Picker,
Weinberg & Auerbach
CPAs.
"For
the most part, people who
have Treasuries and CDs
tend to be retirees,"
he says.
Since all three types are backed by the federal government, the investments carry the reputation of being safe and secure. And the exemption from state tax makes them attractive to retirees and people living in areas with high state income taxes.
Trying
to figure out which options
best match your savings
strategy? Here are several
key points to compare and
contrast at a glance.
