People who have some money to invest, and do not want to put them in risky financial instruments, have several options to choose from. Of course, deposits in the bank are the most popular, although the profits that can currently be drawn from them are not very encouraging. Therefore, more and more people are looking for another safe way to deposit their money and more and more of them, decide to purchase Treasury Bonds.
What are Bonds? The easiest way to say is that they are debt securities issued by the State Treasury. In other words, when buying Bonds, we borrow money for a certain period of time, and the State Treasury pays us money for it. Funds that are obtained from the sale of bonds are used for health care, education, police etc. As the Treasury is guaranteed by the State Treasury, we have almost 100% certainty that our money will return with interest. For there is only a minimal probability that a given country will “go bankrupt”.
The State Treasury issues bonds almost every month. These are securities with a buyout after two, three, four or ten years. The choice of the period for which we borrow money from the state depends on our preferences. However, we must know that the longer the State Treasury “spins” our money, the more interest we pay. In the case of two-year Bonds, we have a fixed interest rate on them, while in the case of others, it is a variable interest rate. It is calculated as the amount of inflation, plus a predetermined interest rate. Therefore, we know that our money will not lose its value because we always get interest higher than inflation.
Is it worth investing when buying the Treasury Bond? It seems that it is a good alternative for all those who prefer safe investments, a low but safe profit pre-established. These securities have a better interest rate on deposits and, moreover, they are equally secure. We also need to know that if the need arises, we can cash our Bonds earlier, for a small fee. So if you are looking for safe investment products, think about whether the Treasury Bonds are not the best option for you.