Treasury Bonds Guide 2026: T-Bills, T-Notes, TIPS & How to Buy

What are Treasury Securities?

Treasury securities are debt obligations issued by the U.S. Department of the Treasury to finance government operations. They are backed by the "full faith and credit" of the U.S. government, making them among the safest investments in the world.

Key Benefits

• Safety: Backed by U.S. government—virtually zero default risk
• Liquidity: Largest, most liquid bond market in the world
• Tax Advantages: Exempt from state and local income taxes
• Predictable Income: Fixed interest payments (except I-Bonds)
• Portfolio Stability: Often rise when stocks fall

Types of Treasury Securities

Type	Maturity	Interest Payment	Minimum
Treasury Bills (T-Bills)	4-52 weeks	Sold at discount, no coupon	$100
Treasury Notes (T-Notes)	2-10 years	Semi-annual coupon	$100
Treasury Bonds (T-Bonds)	20-30 years	Semi-annual coupon	$100
TIPS	5, 10, 30 years	Semi-annual, inflation-adjusted	$100
I-Bonds	30 years (1 year min hold)	Accrues, inflation-adjusted	$25
FRNs	2 years	Quarterly, floating rate	$100

T-Bills (Treasury Bills)

Short-term securities sold at a discount. You buy for less than face value and receive full face value at maturity. The difference is your interest.

Example: Buy $10,000 T-Bill for $9,800, receive $10,000 in 6 months = $200 interest

T-Notes and T-Bonds

Pay fixed semi-annual interest (coupon) and return principal at maturity. Notes mature in 2-10 years; bonds in 20-30 years.

TIPS (Treasury Inflation-Protected Securities)

Principal adjusts with CPI inflation. Interest rate is fixed, but since it's paid on the adjusted principal, your interest payments grow with inflation.

I-Bonds (Series I Savings Bonds)

Combination of fixed rate + inflation rate. Currently offering attractive yields. Limit: $10,000/person/year electronically, plus $5,000 via tax refund.

How to Buy Treasury Bonds

Option 1: TreasuryDirect.gov

Buy directly from the government with no fees:

1. Create account at TreasuryDirect.gov
2. Link your bank account
3. Purchase at auction (T-Bills, Notes, Bonds, TIPS) or anytime (I-Bonds)
4. Hold to maturity or sell on secondary market

Option 2: Through a Broker

More flexibility but potential commissions:

• Fidelity, Schwab, Vanguard — often commission-free
• Can buy on secondary market at current prices
• Easier to sell before maturity
• Better for building a bond ladder

Option 3: Treasury ETFs

Most convenient for diversified Treasury exposure (see below).

Treasury ETFs

ETF	Ticker	Duration	Yield	Expense Ratio
iShares 1-3 Year Treasury	SHY	Short	~4.5%	0.15%
iShares 7-10 Year Treasury	IEF	Intermediate	~4.2%	0.15%
iShares 20+ Year Treasury	TLT	Long	~4.5%	0.15%
Vanguard Short-Term Treasury	VGSH	Short	~4.5%	0.04%
Vanguard Intermediate Treasury	VGIT	Intermediate	~4.3%	0.04%
Vanguard Long-Term Treasury	VGLT	Long	~4.6%	0.04%
iShares TIPS Bond	TIP	Mixed	Real + inflation	0.19%

Duration Strategy

• Short-term (SHY, VGSH): Lower interest rate risk, stable prices
• Intermediate (IEF, VGIT): Balance of yield and stability
• Long-term (TLT, VGLT): Higher yields, more price volatility, best for rate cuts

Understanding Treasury Yields

Current Yield Curve (January 2026)

Maturity	Yield
3-Month T-Bill	~4.3%
6-Month T-Bill	~4.2%
2-Year Note	~4.1%
5-Year Note	~4.0%
10-Year Note	~4.15%
30-Year Bond	~4.4%

Yield Curve Shapes

• Normal (upward sloping): Longer maturities yield more — healthy economy
• Flat: Similar yields across maturities — transition period
• Inverted: Short-term yields higher — often precedes recession

Price-Yield Relationship

Bond prices move inversely to yields:

• If rates rise, existing bond prices fall
• If rates fall, existing bond prices rise
• Longer duration = more price sensitivity

Role in Your Portfolio

Why Include Treasuries?

• Diversification: Often rise when stocks fall (flight to safety)
• Income: Predictable cash flow for retirees
• Capital preservation: Protect principal near financial goals
• Reduce volatility: Smooth overall portfolio returns

Suggested Allocations by Age

Age Group	Stocks	Bonds	Treasury Allocation Within Bonds
20s-30s	90%	10%	50-100% Treasuries
40s	80%	20%	50-75% Treasuries
50s	70%	30%	50-75% Treasuries
60s+	50-60%	40-50%	75-100% Treasuries

Treasury Ladder Strategy

Spread purchases across different maturities to reduce reinvestment risk:

• Buy Treasuries maturing in 1, 2, 3, 4, and 5 years
• When the 1-year matures, buy a new 5-year
• Provides regular liquidity and averages interest rates

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Treasury Investment Checklist

1. Determine your bond allocation based on age and risk tolerance
2. Choose between individual Treasuries (TreasuryDirect) or ETFs
3. Consider duration based on interest rate outlook
4. Include TIPS or I-Bonds for inflation protection
5. Rebalance annually to maintain target allocation

References

3

• SEC EDGAR Full Text Search ↗ (opens in a new tab) SEC
• FINRA BrokerCheck ↗ (opens in a new tab) FINRA
• TreasuryDirect ↗ (opens in a new tab) U.S. Treasury