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President Woodrow Wilson signing the Federal Reserve Act, 1913

President Woodrow Wilson signing the Federal Reserve Act, 1913

 

Investing in the US bond market typically offers more of a risk adverse strategy.  Because of its conservative nature, investors are provided with interest payments, known as coupons, and/or a return due at maturity, if it’s not “called”. In general, treasury securities are either marketable – such as bills, notes, bonds, or TIPS (Treasury Inflation Protected Securities) – or non-marketable; which usually is in the form of savings bonds or zero-coupon bonds. Marketable securities are backed by the presumed risk-free disposition of the federal government.  Factors that affect a bond’s rate of return, or yield, are the current rates of interest and inflation.  Overall, when investors consider purchasing government bonds one should pay strong attention to whether to hold them short-term or long, total return, and income taxes.