Need a Safe Place to Park? Try a 10-Year Bond


Bear market. Bull market. Trade tariffs, a tumultuous real estate market, buyer panic, buyer confidence. How does a novice investor make smart choices for growing money in the economic times we are all currently facing?

When you’ve made a little money (well done you, you hard worker) and you want to see it grow, making sound investment decisions today for a financially secure future can be confusing at best and confounding at worst.

Today, we’re going to talk about investing in bonds that can help you modestly grow your money while you gain more confidence in your market knowledge. As you learn more about all your choices for investment, you can begin to make sense of all the ways your nest egg can increase as well as the level of risk or commitment present in each investment choice you make.

At Twin Cities Lending, we’re here to help you with all your home financing needs. Call our team for a free mortgage review today.

What are government bonds?

A bond is a way for our government to fund itself from investment from both domestic and foreign investors. Bonds are a low-risk investment, which means that you are very likely to get back what you paid in, and sometimes extra in the form of interest.

There are several different types of government bonds that are selling today. They are:

  • Treasury Bonds: A long-term investment bond, with maturity, dates at 30 years from the date of purchase, this means that you get the full amount of your investment back, plus some interest 30 years after you purchase the bond. Payments on your bond from the government are issues twice per year until the bond maturity date.
  • Treasury Bills (T-bills): These are short-term investment bonds, with a maturity date of up to a year from the date of purchase. The securities get sold at discounts to their face value (similar to seasonal sales at a retail store) T-bills mature between four and fifty-two weeks and pay you the face value of the bond.
  • Treasury Notes (T-notes): T-notes are mid-term securities that mature in two, three, five, seven, or 10 years. The government makes “payments” on these T-notes twice per year, which includes a bit of interest over the life of the note. Interestingly, T-note rates of return are used in the financial world as a benchmark for other markers like mortgage interest rates as well.

In Short Term Investments, Flexibility is Essential


When looking for a “parking spot” for your money while you make more significant decisions, it’s paramount to have as much flexibility as you can leverage. Ten-year T-notes are a flexible investment option that allows you a lot of choice about when and how to move your money around, should you choose to do so.

Once you purchase a T-note, you could hold onto it for the entire term of the bond, in this example, that’s ten years. If you decide you need the cash or want to change your investing strategy, you can sell the T-notes early on the secondary market before the maturity date.

The Tax Man Cometh, but Not as Much for T-notes

Whenever you decide to invest, you must be familiar with the tax implications of every financial move you make to place yourself in the best position for the growth of your capital.

Ten year Treasury Notes are a great purchase in part because local or state governments do not tax the interest earned from T-notes. That means the money you invest in T-notes can grow without the shadow of taxation down the road as the treasury yield curve on this type of bond builds.

(Check in with your accountant for information on how T-note interest income may be taxed federally, though.)

T-Notes are Easy to Buy


Many hard-working Americans think they have to have thousands or even millions of dollars to be an active investor and build wealth, but this is not true with T-bills. You can purchase them online at the U.S. Treasury website, or directly through a broker or a bank with a minimum investment of $100. Start with buying a bunch of bonds or just a few in $100 increments.

You could begin to build your money a little at a time by setting aside $100 each month to purchase T-notes if you so desired, which incidentally, could be a great way to build up a sizeable down-payment on your first, or next, home purchase.

Putting money aside into a short-term, low-risk investment like T-notes can help you feel you are progressing toward greater wealth. The money you put away is still very accessible, but also just enough removed from you that you are not tempted to spend your pile of cash before you get to your goal.

Every investment has Risk; be a Smart Shopper

While government bonds held to maturity are guaranteed to collect interest and a full return of initial investment, bond purchasers could experience a loss when selling a T-note before it’s maturity date.

Though bond investment has historically been considered a very safe investment option, interest rates are still subject to market fluctuations. Selling a bond early at a lower yield than when you purchased it means that your capital could reduce a bit.

Talk to your broker or a fiduciary financial advisor (“fiduciary” means the person you work with must advise you based on your best interests, not theirs) to make the best decision for your current financial goals.

If you plan to make a larger purchase relatively quickly (like a home) with the money you’ve placed in T-notes, a shorter term bond may make more sense for you than a longer-term note.

Finally, when it comes to saving money and growing your financial power, you are the best judge of what is right. Take time to evaluate your investment options, consult experts you trust, and make the decisions that fit for your future savings goals as well as your immediate larger purchase desires.

At TwinCity Lending, we are here to help you secure the mortgage product that is a fit for your best future financial outcome. We are proud to offer ethical and friendly service to all our local customers and to provide timely education on financial matters, so you feel confident in the “money” driver’s seat.  Come see us today and let us help you land the home of your dreams!

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