Purchasing bonds is a good choice for diversifying an investment portfolio. Savings bonds are non-marketable investment opportunities funded by the United States government. The nature of this arrangement is that consumers purchase bonds from the Treasury, who in turn uses this money to fund projects. These bonds are a form of government debt and over time, those who purchased the bonds get a return on the face value plus the interest earned over the type of the bond.
There are several places where consumers can purchase bonds. Bonds can be bought through a full service or discount broker. However, many bond brokers may require an initial deposit of up to $5000, making this type of arrangement not feasible for many small investors.
Another way to purchase bonds is through a mutual fund specifically focusing on bonds. This type of investment is called a bond fund. Some financial institutions may offer this and other type of bond purchasing options to their clients.
If an individual cannot purchase bonds through a broker or their bank, the easiest ways to purchase bonds is directly through the US Treasury website called Treasury Direct. Individual consumers can set up an account and purchase up to $5000 worth of bonds per social security number annually. Through this site, investors can also use as little as $25 to participate in investing in bonds (that is dependent on what type of bond an individual purchases).
The Bureau of the Public Debt launched Treasury Direct so individuals could bypass brokers and purchase bonds directly from the Treasury. Most countries have this type of system in place for their citizens as well. Whether you decide to flush out your portfolio through a broker, your bank, or through Treasury Direct – savings bonds are an excellent tool to have in an investment portfolio.