I am having a really hard time remembering the Government Bonds and their maturities, etc. I want a way to really practice them but I’m having trouble there too.
Is there a simple way to remember T-Bill, T-Bonds, T-Notes, STRIPS, TIPS. Might as well add in Treasury Receipts as well. Any advice would be greatly appreciated.
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Try to remember them in maturity order: “Bills, notes, bonds, TIPS, STRIPS”. It’s not perfect, but here’s how I think of treasury products in my head:
SHORT TERM
- T-Bills = Think of a $1 bill. Shortest term (no more than ONE year); interest paid at maturity. It’s considered a “money market” security.
INTERMEDIATE TERM
- T-Note = Intermediate 2 (TWO) -10 (TEN) years. Pays interest semi-annually.
LONG TERM
- T-Bond = Longer-term (up to 30 years), pays interest semi-annually. It’s most like a regular bond, but from the U.S. Gov’t.
- TIPS = Long term inflationary protection (par value floats with CPI); pays interest semi-annually
- STRIPS = “Stripped of their coupon; phantom tax” = Long-term zero coupon that pays interest at maturity.
NOT TREASURY PRODUCT
- Receipts are re-sold treasury products; not offered by U.S. Gov’t.
Last thing to remember: treasury products are all very liquid and considered safe from default risk. Hope it helps.
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