How to Buy Treasury Bonds Direct (Safe 5% Yield)
The website looks like it was built in 1998, but it holds the safest investment on Earth. Here is how to navigate TreasuryDirect.gov to buy “Risk-Free” US Government debt and skip the state taxes.
Why Treasuries Beat High-Yield Savings (HYSA)
A 5% return at a bank is NOT the same as a 5% return from Uncle Sam. The tax exemption makes Treasuries the clear winner for high earners.
| Feature | Bank CD / HYSA | US Treasury Bill |
|---|---|---|
| Nominal Yield | 5.00% | 5.00% |
| Federal Tax | Yes | Yes |
| State Tax (CA/NY) | Yes (~10%) | 0% (Exempt) |
| Safety | FDIC Limit | Unlimited* |
| Where to Buy | Best For |
|---|---|
| Brokerage | Trading / T-Bills |
| TreasuryDirect | Series I Bonds |
How to Use TreasuryDirect.gov
Warning: Do not use the “Back” button on your browser, or the site will log you out. It is very sensitive.
Step 1: Open an Account
Go to the site and select “Open a New Account.” You will need your SSN, Driver’s License, and Bank Routing Number.
Note: If the system cannot verify you automatically, you may have to mail a physical paper form stamped by a bank. (Yes, really).
Step 2: BuyDirect Tab
Once logged in, click the “BuyDirect” tab at the top. Select the type of security:
- Bills (T-Bills): Short term (4, 8, 13, 26, 52 weeks). Sold at a discount (e.g., pay $990, get $1,000).
- Notes/Bonds: Longer term (2 – 30 years). Pays interest every 6 months.
- Series I Bonds: Inflation-protected savings bonds. (Limit $10k/year).
Step 3: The Auction Process
You don’t buy instantly like a stock. You place an order for the next auction. The price/rate is determined on auction day, and the money is withdrawn from your bank shortly after.
What Should You Buy?
1. T-Bills (The Cash Park)
Use this for money you need in 1-6 months. It pays the current high interest rate and is very liquid. If you buy 4-week bills, you can set them to “auto-reinvest” to create a passive income ladder.
2. Series I Bonds (The Inflation Shield)
These are special. The interest rate has two parts: a fixed rate + an inflation rate. They are designed so your money never loses purchasing power.
Rule: You must hold them for at least 1 year. If you sell before 5 years, you lose the last 3 months of interest.
Pro Tip: The “T-Bill Ladder”
Buy 4-Week T-Bills every week for 4 weeks.
Result: Every Tuesday, one bill matures and cash hits your account. If you don’t need it, the “Auto-Reinvest” feature rolls it into a new one. It’s a perpetual high-yield machine.