There are so many different ways that we can invest our money. If you’re smart, you’ve diversified your options. However, you might have overlooked one of the smartest options available today: TreasuryDirect.gov. Investing in savings bonds that are backed by the government is a flexible, secure way to stow your money and let it grow. If you haven’t considered this option, here are ten reasons why it’s a smart course of action:
1. It’s Quick and Easy to Get Started
So what is TreasuryDirect? As they succinctly explain directly on their own website:
“TreasuryDirect is the first and only financial services website that lets you buy and redeem securities directly from the U.S. Department of the Treasury in paperless electronic form.”
In other words, you can quickly and easily go online, set up an account, and start investing in savings bonds through the site. It takes less than ten minutes to set up an account. You link that account to your regular bank account, so it is fast and simple to transfer funds. Although there is a lot that you can explore and learn on the site, you can grasp the basics really quickly and start investing in no time.
2. The Government Backs The Products
When you invest through TreasuryDirect, you do so directly through the US government. They back the investments. While it’s not foolproof, it’s one of the most risk-free options for investing today.
3. TreasuryDirect Offers More Than Savings Bonds
Savings bonds are the big thing that people invest in through the site. However, you can invest in a variety of security treasuries with this tool.
For example, you can invest in a specific type of savings bond called TIPS. That acronym is short for Treasury Inflation-Protected Securities, which, as the name suggests, protect your investment against inflation.
You can also invest in treasury bills and notes. The more you get to know about your different options, the more obvious it becomes that you have an array of good investment choices.
4. You Have So Many Options
In addition to having investment options, you really have a lot of choice about how you make your investments. There’s just a lot of flexibility with TreasuryDirect. For example, you can ladder your investments, buying 4-week bills at auction, which means that your money will never be tied up for long. Sometimes people don’t invest because they want the security of having that money easily accessible in the bank in case of an emergency. TreasuryDirect can give you a lot of that security while still allowing you to earn more than you would with a basic savings account.
5. The Investing Rates Are Competitive
People who invest their money in TreasuryDirect definitely want the risk-free security and ease of the product. In the end, though, this is an investment, so they also want a return on their money. It turns out that the investment rates these products offer are quite competitive. Savings bonds pay about 3%, which is clearly better than just sticking your money in a regular savings account.
Investing in bills and notes through TreasuryDirect.gov will give you a slightly lower return. Nevertheless, it’s still about 2%. Even if you invest in TIPS, you still have a competitive rate of about .5%. That doesn’t sound like much but considering that you won’t’ be impacted by inflation, it’s actually a great deal.
6. It Won’t Cost You Much to Earn
You always have to weigh the investment benefits with the costs. In this case, the costs are minimal. There are no fees at all. You can easily invest your money without having to pay extra out of pocket to do so. Moreover, you don’t have to put a lot of money into the account. Whereas some investment forms require huge amounts of cash to start, you can easily begin investing with TreasuryDirect.gov starting with as little as $25.
7. The Interest You Earn May Be Tax-Free
As you begin to learn more about investing in savings bonds, you’ll see that there are numerous benefits. One of them is the fact that you might not even have to pay taxes on the interest you accrue. You get just to add that money to your total net worth. Many of your investments are not so simple. Come tax time, you may be unpleasantly surprised to discover that you owe more than you expected. Nobody wants to owe extra money on the money that they’re trying to save.
This is especially important if you have a lot of money to invest. For example, let’s say that you receive a half million dollar inheritance. You could easily earn more than ten thousand dollars annually in interest from that investment. If you place that in a place where it’s taxed, you quickly lose a big chunk of it. On the other hand, if you put it into savings bonds, then you may not have to pay those taxes at all.
Of course, it’s important to do your research. Some investments will be tax-exempt at the state level but not at the federal level.
8. There Are Ways to Simplify Investing
Some people worry that putting their money into savings bonds is going to require a lot of work on their part. Indeed, if you want to get really involved in the trading, you certainly can. However, you can also automate a lot through TreasuryDirect.gov so that you don’t have to overthink it if you don’t want to. One great option is to buy the 4-week bill, set it to reinvest automatically, and then auto send the maturity directly into your regular savings account.
9. You Can Gift Savings Bonds
Savings bonds make a great gift, particularly for children – whether newborn or graduates. You can easily keep your money in your account then gift it when the time is right. That’s because the site has an easy-to-use “gift box” function.
10. Diversifying Your Investments Is Always Wise
The more places where you can place your money, the better off you are. You just never know what might happen in the market. Therefore, spreading your money out is a way to protect yourself against the unexpected. If you already have basic investment accounts but haven’t worked with TreasuryDirect, yet, then it’s another place to place your money.