Tuesday, March 25, 2008

Uncle Sam Wants YOU to Lend Him Some Money

It’s sort of a case of supply and demand. The government needs money. One way they get money is by asking citizens to lend it to them. They do this through the sale of Treasury Bonds. Since 1998 these bonds have been sold for $1,000 in other words that was the smallest amount Uncle Sam was willing to take from an individual. But Sam needs more, so he’s lowered minimum bond to $100.

"The new, lower minimum Treasury amount will put marketable securities within reach of more savers and investors in the United States and around the world," said Anthony Ryan, Assistant Secretary of the Treasury for Financial Markets.

Mr. Ryan’s statement is true. The new, lower minimum could also bring more money to the government. It’s a win, win.

Treasuries are nice because they pay a fixed interest upon maturity—so you know what you’ll get. They are also guaranteed by the U.S. government and are free of state and local taxes on the interest they pay. That’s makes them a nice little investment.

The Treasury Department announced that beginning April 7, you could buy as little as $100 in Treasury marketable bills, notes, bonds and Treasury Inflation-Protected Securities (TIPS). Investors will also be able to purchase these securities in increments of $100.

Treasury securities can be purchased directly from the Treasury by creating a TreasuryDirect account online at treasurydirect.gov or a Legacy Treasury Direct account.

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