How to Buy Treasury Bonds on Fidelity

Do you know how to buy Treasury bonds on Fidelity? Are you curious about the benefits and types of Treasury bonds? We’ve got you covered! This guide will explain how to buy Treasury bonds on Fidelity, the types of bonds available, and why they might be a good addition to your portfolio. Not only will you learn the steps involved, but you’ll also understand the nuances of Treasury bonds and how they can be a strategic part of your investment plan.

Buying Treasury Bonds on Fidelity

Buying Treasury bonds on Fidelity is straightforward. Whether you’re a seasoned investor or a beginner, Fidelity’s platform makes the process easy and accessible. Here’s a step-by-step process:

• Log in to your Fidelity account: First, access your Fidelity account using your username and password.
• Navigate to the “Fixed Income” section: Once logged in, go to the main menu and find the “Fixed Income” section, which includes bonds and other fixed-income securities.
• Select “Treasury Bonds” from the options: In the Fixed Income section, choose “Treasury Bonds” to view available options.
• Choose the type of Treasury bond you want to buy: Decide which type of Treasury bond suits your investment strategy – Notes, Bonds, or Bills.
• Enter the amount and complete your purchase: Specify the amount you wish to invest, review the details, and confirm your purchase.

Types of Treasury Bonds

There are three main types of Treasury securities you can buy, each serving different investment needs:

• Treasury Notes – These have maturities ranging from 1 to 10 years. They pay interest every 6 months, making them suitable for investors seeking periodic income.
• Treasury Bonds – These can have maturities up to 30 years. Like notes, they pay interest every 6 months, but their longer maturity period typically offers higher yields.
• Treasury Bills – These are short-term securities with maturities from 4 to 12 months. They do not pay periodic interest but are sold at a discount to their face value, with the full value paid at maturity.

Why Buy Treasury Bonds?

Treasury bonds are a low-risk investment option. They offer reliable interest payments and protect your capital from volatile stock markets. Here are some key benefits:

• Low default risk: Treasury bonds are backed by the US government, ensuring a very low risk of default.
• Exemption from state and local income taxes: Interest income from Treasury bonds is exempt from state and local taxes, though it is subject to federal taxes.
• High liquidity: Treasurys are some of the most widely traded securities, making them easy to buy and sell at expected prices.

Interest Rates and Yields

Interest rates on Treasury bonds are set at the time of purchase and remain fixed for the life of the bond. They offer competitive yields, especially in times of economic uncertainty.

Type	Maturity	Interest Payment
Treasury Notes	1 to 10 years	Every 6 months
Treasury Bonds	Up to 30 years	Every 6 months
Treasury Bills	4 to 12 months	At maturity

How to Add Treasurys to Your Portfolio

Deciding to add Treasurys to your portfolio involves choosing the right type and maturity. Newly issued bonds can be bought at Treasury auctions, while existing bonds can be purchased on the secondary market. Here are your options:

• Newly Issued Bonds: These can be bought directly at Treasury auctions. The price and yield you receive reflect what others are paying at the auction.
• Existing Bonds: Purchase these on the secondary market. The price and yield are quoted at the time of purchase, allowing for immediate acquisition without waiting for an auction.
• Mutual Funds and ETFs: These funds include Treasurys as part of their holdings, providing exposure to Treasury securities through managed portfolios.

Buying through mutual funds or ETFs can be a good option if you prefer a diversified approach, where fund managers handle the buying and selling of Treasurys to optimize returns and manage risk.

Tax Implications

Interest income from Treasury bonds is exempt from state and local taxes but subject to federal taxes. Additionally, if you buy a bond at a discount on the secondary market and sell it at a profit or hold it until maturity, the gain is subject to federal and state taxes. These gains are considered capital gains, while gains from Original Issue Discount (OID) bonds are treated as income.

Conclusion

Buying Treasury bonds on Fidelity is a simple and secure way to invest. They offer low-risk, reliable income, and are a good hedge against stock market volatility. By understanding the types of Treasurys and their benefits, you can make informed investment decisions to enhance your portfolio.

Start adding Treasury bonds to your portfolio today and enjoy the peace of mind that comes with low-risk, reliable returns!