Treasury Bonds

When you buy a Treasury bond, you are lending money directly to the United States government. In return, the government promises to pay you back with interest. This is a great choice if you want to protect your money while earning a steady return.

The Three Main Types of Marketable Treasuries

The U.S. Treasury offers different "flavors" of debt based on how long you want to lend your money. To be fully informed, you should know that "Marketable" means you can sell these to other investors before they even finish:

  • T-Bills (Treasury Bills): Short-term loans that last from a few days up to one year. You buy them at a discount (like paying $95 for a $100 bill) and get the full value when they "mature."

  • T-Notes (Treasury Notes): Medium-term loans that last between 2 and 10 years. These pay you interest every six months.

  • T-Bonds (Treasury Bonds): Long-term loans that last 20 to 30 years. These are for serious long-term savers and also pay interest every six months.

Special Savings Bonds (Series I & EE)

Unlike the ones above, Savings Bonds are "Non-Marketable," meaning they are registered to you and cannot be sold to anyone else. They are very popular for youth because they are affordable and easy to understand.

  • Series I Bonds: These are designed to protect you from inflation. Their interest rate changes twice a year based on how much prices are rising in the real world. In 2026, these are a favorite for people who want to make sure their money doesn't lose its "buying power."

  • Series EE Bonds: These have a fixed interest rate. The coolest part? The government guarantees that if you hold an EE bond for 20 years, it will double in value, no matter what the interest rates were.

Essential Facts for You and Your Parents

Review these four points with your parent or guardian to make sure you are ready to invest:

1. Zero State and Local Taxes

One of the biggest perks of Treasury investments is that the interest you earn is exempt from state and local taxes. You only have to pay federal income tax on the profits.

2. The "Lock-Up" Period for Savings Bonds

If you buy Series I or EE bonds, you cannot cash them in for at least one year. If you cash them in before five years, you will lose the last three months of interest as a penalty. These are for money you don't need right away.

3. Opening a "Minor Linked Account"

To buy these directly from the government, your parent needs to open a TreasuryDirect account and then create a "Minor Linked Account" for you. This allows them to manage the bonds on your behalf until you are 18.

4. Purchase Limits

The government limits how much you can buy to keep things fair. For Savings Bonds (I and EE), the limit is usually $10,000 per person, per year for each type.