Financial Ratios and Statistics – FahStats

Archive for March, 2011

Treasury investments, or securities, are bonds issued by the Department of Treasury. In basic concept, they are the many different forms of loans that the people of the U.S. give to the government. There are four types of treasury securities:

1. Treasury bills or T-bills: these are securities that have a length of maturity that is less than one year (13, 26 or 52 weeks). Therefore, they are offered in a discounted form. Instead of offering interest along with the repayment amount, purchasers are offered more money at the time of maturity than they paid for the bill to begin with.

2. Treasury notes: This kind of security has a longer maturity date of 2, 5, or ten years, and they are sold in $1,000 increments.

3. Treasury bonds: With a long maturity date of 10-30 years, these securities can be helpful for investors who need to build a long-term strategy. Treasury bonds in paper form can be converted to electronic form.

4. Savings bonds: These securities differ from others in that they are registered to one person only and therefore cannot be actively traded. Also, they are the most affordable kind of treasury investment, as investors can purchase them for as low as $25.

What are the not-so-popular kinds of treasury investments?

In addition to these kinds of treasury investments or securities, the government also sells Patriot bonds, and STRIPS (Separate Trading of Registered Interest and Principal Securities). These investments separate the interest and principal parts of the security; they have the structure of a T-bill and mature between 1-30 years after issuance.

They are also the stripped version of TIPS (Treasury Inflation-Protected Securities). As zero coupon bonds, they do not pay interest payments. I Bonds and TIPS complete the wide variety of Treasury Investments. These bonds are purported to keep up with inflation, with the interest rate or principal balance adjusting with the nation’s economy.

What are the advantages of investing in the treasury securities?

Except for savings bonds, each of these is traded extensively on the market and can be easily converted to cash. They are backed by the Federal government and are usually considered low or no-risk investments. The interest on these “loans” is not taxable on the local or state level.

These securities are registered. This simply means that when these are purchased, the name that these are registered to is the sole owner. So, if you lose them these can easily be replaced if misplaced.

How can somebody invest in savings bonds?

In the past savings bonds were issued on paper. Since October 2002, the US treasury went high-tech and started to offer an online service TreasuryDirect. So, these purchases can be made online at your convenience.

If you’re a college student, you know how expensive books, movies and tuition can be. And if you only work during the summer break, you may be looking for a way to stretch your funds through the cold winter months. Fortunately, a student credit card can help. Find one with low interest and good terms, and you can charge during the lean times and then pay it off when you’re making money on your summer job.

To get a student credit card, follow these guidelines:

1. Find some cards for comparison.

It’s easier than you think. Credit card companies often set up tables and booths at college fairs. You may even find fliers or applications around campus. And you can always find a student credit card with an online search. Be sure that the cards you’re considering are specifically student cards. Credit cards aimed at students tend to have more lenient credit score and credit history criteria, and they also tend to have lower interest rates.

2. Pick the one with the best terms.

Not all credit cards are created equal! Since your student credit card is probably your first, educate yourself a bit about the terms and jargon you’ll encounter. Choose one with a low interest rate, since that’s the “extra” amount your credit card will tack onto your balance each month. Look for one with a longer grace period, too, which is the amount of time you have to make a payment before interest begins accruing. Other things you should look for is a card with no annual fee and a low late payment fee.

3. Apply!

Simply fill out the application–either on paper, online or on the phone–and answer the questions on the form. You’ll need to reveal all the basics, like your name, current address and phone number. You’ll also need to provide them with a “permanent” address and phone number. The application will include lines for information about your school, your school’s address, your enrollment status and your year of graduation. It’s possible they’ll ask about your bank accounts and employment.

If you’re currently employed or have significant savings in the bank, chances are your line of credit–the maximum balance you can hold on your card–will be higher. But even if you only have a summer job, you should still be able to qualify for $500 – $1,000 in credit.

A bond or debt security is like a loan where the issuer gets external funds to finance a company or governments expenses. They are paid at fixed interest over a period of time.There are various type of bonds which are sold by the corporations, federal government, state and local governments, and foreign governments. Getting your initial investment back is one of the great things about bond investing. This is considered to be a good investment for those who are just starting out in investing and those with risk tolerance that are low. Bonds investing is considered safe with good returns.The federal government sells treasury bonds that has maturity dates that range from three months and longer. You can get them through the Treasury Department. Treasury bonds are backed by the federal government and taxed based on the interest the bond earns. They include treasury bills or T-Bills, treasury notes or T-Notes, and treasury bonds.A government bond with higher interest rate than that offered by the federal government can be found through the local or state government. They have a higher interest rate because local and state government can go bankrupt not like the federal government. The common local and state government bond is called a tax-free municipal bond. It is free from income tax including the interest. State and local taxes can also be dropped.A corporate bond is basically debt sold by a company. You can get corporate bonds through public securities markets. They usually have a higher interest rate but are also riskier because if the company goes bankrupt then the bond losses its value as well.Foreign bonds are very difficult to get and often times part of a mutual fund. There are also a lot of risk involved in investing in foreign bonds and other consider investing in bonds issued by the US government to be the safest. You may not get a higher interest since there is almost no risk involved. You can reinvest the bond to get good results as soon as the bond reaches maturity.