The minimum you can invest in government bonds is $25. That's for a U.S. savings bond, a type set up specifically for individuals. For other Treasury securities, the minimum investment is $100. All securities from the federal government can be purchased from TreasuryDirect.gov. Municipal bonds are typically sold in increments of $5,000, and buying them requires a broker.
U.S. Savings Bonds
U.S. savings bonds come in denominations as low as $25, and $25 is the minimum purchase. You can buy any increment up to $10,000 a year on TreasuryDirect.gov. Savings bonds are the only Treasury securities that are not sold via auction. You can buy savings bonds automatically with payroll deductions. The money will be used to buy a savings bond of the denomination you've specified. A purchase takes place whenever the money you set aside is sufficient to buy one.
Treasury bonds are sold in increments of $100 with a $100 minimum purchase. They're sold by auction through TreasuryDirect.com. The per-auction investment maximum is $5 million or 35 percent of the initial offering. This will be helpful information if you win the lottery. Treasury bonds mature in 30 years, and -- unlike other Treasury securities -- can still be purchased in paper form.
T-Notes, T-Bills and TIPS
Treasury notes mature in two to 10 years, depending on the issue. Treasury bills mature in four weeks, 13 weeks, 26 weeks or 52 weeks. There are also Treasury inflation-protected securities -- bonds with yields linked to the Consumer Price Index. TIPS come in maturities of five, 10 and 30 years. T-notes, T-bills and TIPS are sold at auction in increments of $100 with a minimum purchase of $100, just like Treasury bonds. Also as with Treasury bonds, you can buy up to $5 million or 35 percent of the initial offering amount per auction.
"Munis," as municipal bonds are called, are usually sold in increments of $5,000. You almost always buy them through a broker. Munis aren't just bonds from municipalities. They include all government bonds other than Treasurys. Their major charm is that the proceeds are usually free of federal taxes, often free of state taxes, and sometimes free of local taxes. As investment vehicles, they are complex, because not all handle interest rates the same way. They're typically purchased by investors with deep pockets, although there are muni mutual funds as well.
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