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Securities Issued By United States Government
The Treasury Department emits debt securities to confront public expenditure. The accrued interests for these securities are exempted from state rent taxes, but not from the federal.
As an investor, you surely are familiarized with the modality of treasury securities that are sold directly to the public: the saving bonds. The patriotism and the security of the refunding were the reason for which most of the people would subscribe to saving bonds, and few financial advisors would recommend these securities as an investment.
However, in the last years, the descent of the types of interests and the changes done in the fiscal laws have made that these become more interesting. In first place, the interests paid to the savings bonds are not established anymore with a fixed character for long periods of time, but are adapted periodically to the interest that is prevailing on the market. In second place, the tributary norms gives the bondholders the opportunity to choose between paying the taxes from the interests at the time of becoming due or to postpone the payment of these taxes until the expiration and refunding of the bonds.
For these reasons, the saving bonds are for the public an attractive way of investing that portion of their funds that they save as a protecting umbrella.
In these last years, many investors have familiarized themselves with another important kind of public debt represented by treasury bills and treasury notes.
The treasury bills (t bills) are generally sold in multiples of 5,000 dollars from a minimum nominal value of 10,000 dollars, and with an expiration of 91 days, 182 days and 52 weeks. However, a recent federal program directed to the small investor admits an increase of 1,000 dollars always that the t-bills are bought directly at an office of the Federal Reserve Bank.
All the purchases of treasury bills are registered as account annotations; the receipt given to the buyer at the moment of the purchase is the only accredited document.
For practical effects, the treasury bills are equal to cash money. Although the bigger investors dominate the market, many small investors buy these securities because they are at their disposal at relatively small sums.
The treasury bills don’t accrue half-year interests, as do bonds and debentures, but are sold at a discount from it is nominal value, that is, for a lesser sum than that which they will receive at their expiration.