How to Invest If You Can't Afford to Lose

Nothing is safer than Treasury debt.

Nothing is safer than Treasury debt.

The safest investments are the Treasury's inflation-protected securities, or TIPS. Young couples who can’t afford to take chances will find a lot to like about TIPS. They are safe from default risk and inflation risk; the Treasury increases the principal value when inflation rises. If you hold TIPS until maturity, they are safe from price risk caused by rising interest rates. The interest that they and all Treasury bonds pay is free from state and local taxes, and you can buy them in small denominations from the Treasury for no fee. Other safe bets are Series I savings bonds, also inflation-protected; and short-term Treasury bills maturing in less than one year.

Establish your budget and purchase schedule. The best advice for young couples is to “pay yourself first.” Your budget should realistically reflect the money you can put aside for investment. Having to prematurely cash in investments would be counterproductive. For instance, the Treasury revokes a half-year of interest from savings bonds redeemed in less than five years. Your purchase schedule should allow you to space out your buying throughout the year so that you are exposed to different interest rates.

Create a Treasury Direct account. The Treasury's online account setup process takes about 10 minutes. You need to provide your Social Security numbers, checking or savings account numbers, and other basic information. After you apply, the Treasury will email you an account number that will allow you to make online purchases.

Buy securities. Simply enter your account number on the Treasury Direct website, pick the securities you want to buy, and tell the Treasury how much you want to spend. It will automatically deduct the cost of the purchase from your checking or savings account, so be sure there's enough money in your account.

Items you will need

  • Checking or savings account at a U.S. bank or credit union


  • Treasury securities are backed by the full faith and credit of the U.S. government and have never defaulted. By diversifying your purchases among TIPS, T-bills and savings bonds, you can create a bond ladder in which you have bonds maturing in various time periods. A bond ladder minimizes price risk from rising interest rates should you be forced to sell a bond before its maturity date.
  • You can also consider bank certificates of deposit. They're considered safe in amounts up to the limit of FDIC insurance, which was $250,000 per person per bank as of 2013. For the last several years bank CDs have paid low interest rates.


  • Although absolutely safe from default, Treasury investments tend to have the lowest yields among fixed-income securities. As your wealth increases, you might consider branching out into investment-grade corporate bonds and blue-chip dividend-paying stocks. Limiting yourself to only the safest investments will slow the long-term growth of your portfolio.
  • For example, in late January 2013, 52-week T-bills were paying 0.14 percent interest, TIPS had a negative yield, Series I savings bonds were paying 1.76 percent and Series EE savings bonds were paying 0.20 percent. One-year CD rates topped out at 0.90 percent.

Video of the Day

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Brought to you by Sapling


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About the Author

Based in Greenville SC, Eric Bank has been writing business-related articles since 1985. He holds an M.B.A. from New York University and an M.S. in finance from DePaul University. You can see samples of his work at

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