T Notes For A Wise Investment Choice

Treasury notes, also called T Notes, can be a decent part of anyone's investment portfolio. Backed by the full faith of the U.S. government, T Notes have been a popular and easy to obtain option for investors everywhere. Unlike savings bonds which require you to hold onto them for a certain period of time, T Notes can be purchased and cashed in on the same day. Let's take a look at the advantages and disadvantages of holding this type of investment choice.

T Notes earn a fixed rate of interest semi annually until they are redeemed. You can buy T Notes with a term of 2, 3, 5, or 10 years.

Advantages:

T Notes are exempt from state and local taxes; you only pay federal taxes on interest earned.

The price and interest rate of T Notes is determined at auction. The price of a T Note could be greater than, less than or equal to the face value of the note.

You can hold a T Note until maturity or sell it before time.

When your T Note comes due you can easily roll it over to a new T Note or invest the monies in a government bond.

Interest is paid out every six months. No waiting until maturity to receive some benefits.

T Notes are advantageous for people who are retired or are saving their money for educational purposes.

Disadvantages:

Compared to other types of investment vehicles, T Notes pay less in interest.

Conclusion:

T Notes can be purchased online or through a bank or broker. T Notes are sold in increments of $1,000 and auctions are held monthly for 2 and 5 year notes; quarterly for 3 year notes; and 8 times per year for 10 year T Notes.

To reflect the computerization of financial offerings, T Notes are no longer made available in paper form as everything is done electronically. Only previously issued T Notes were paper, but all of these have long since matured.

If you are building an investment portfolio, T Notes can be an important part of that portfolio as they are backed by the government and can be a good mix with your IRA, retirement funds, savings bonds, certificates of deposit accounts, stocks, bonds, and other investment vehicles. Check with your banker or broker for additional information or get on the U.S. Treasury website for T Note details and requirements.