Looking for a safe investment that pays steady interest? Treasury notes offer just that. These government-backed securities are popular with anyone who wants to lower risk and preserve capital. In 2025, buying Treasury notes is easier than ever, with several ways to get started—either directly, through your bank or brokerage, or with ETFs. This guide shows simple steps for each approach and explains what you really need to know.
Understanding Treasury Notes
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What Are Treasury Notes?
Treasury notes (T-notes) are loans you make to the U.S. government. In return, the government pays you interest every six months. The big draw? These are backed by the full faith and credit of the U.S. government—one of the safest investments around. T-notes come with set maturities of 2, 3, 5, 7, or 10 years. You receive your original money back (the principal) at the end of that term.
T-notes are available only in electronic format in 2025. The minimum purchase amount is $100, so you can start small or invest more as your comfort grows.
Treasury Notes vs. Treasury Bills and Bonds
It’s easy to get Treasury securities mixed up. Here’s a quick breakdown:
- Treasury notes: 2-10 year maturities, pay interest every six months.
- Treasury bills (T-bills): Mature in a year or less, sold at a discount, no interest payments (just a larger payout at maturity).
- Treasury bonds: 20- or 30-year maturities, pay interest every six months like notes but for a much longer time.
Choose notes if you want steady payments over several years without tying up your money for decades.
How Treasury Notes Generate Income
When you buy a T-note, you lock in a fixed interest rate at auction. This means your payments won’t change, regardless of what happens in the market. The yield (or return) you get is set during the auction based on demand and the current rate environment.
Expect to receive two payments per year. Once the note matures, your principal comes back to you—no surprises.
How to Buy Treasury Notes in 2025
Buying T-notes in 2025 is straightforward. Whether you want to do it yourself or work with a financial professional, it doesn’t take much effort to get started.
Buying Directly Through TreasuryDirect
TreasuryDirect.gov is the official website where anyone can buy T-notes directly from the government. Here’s how it works:
- Open a TreasuryDirect account:
- Must be at least 18 years old and have a valid Social Security number.
- U.S. citizenship or legal resident status is required.
- Set up your account online:
- Link to your checking or savings account for funding and payments.
- Participate in auctions:
- Treasury auctions are scheduled by maturity (2, 3, 5, 7, or 10 years).
- Submit a non-competitive bid to ensure you get the full amount you want at the set rate. (Don’t worry about the competitive bidding process unless you run an investment firm.)
- Manage your notes:
- You can track your holdings, receive interest, and redeem at maturity—all right from your online dashboard.
Key takeaways:
- No fees for buying directly.
- Minimum investment is just $100.
- Interest and principal payments go straight to your linked bank account.
Buying Through Brokerages and Banks
Prefer to use your existing investment accounts? Most brokerages and many banks let you buy T-notes, with a few added perks:
- Secondary market access: Buy T-notes after new ones are issued or sell before maturity.
- Flexible order types: Place orders for new-issue Treasury notes at auction, or buy existing notes in the open market.
- Account requirements: You’ll need a standard brokerage account—no special paperwork required.
Popular online brokerages for Treasuries include Vanguard, Charles Schwab, Fidelity, Robinhood, and Public. Fees are usually low, and you can often buy or sell with just a few clicks.
Advantages:
- Buy and sell anytime during market hours.
- Consolidate T-notes with other investments.
- Access research, rating info, and guidance.
Buying Treasury Note ETFs and Mutual Funds
If you’d rather not pick individual notes, you can buy funds that hold a basket of Treasuries. Treasury ETFs and mutual funds pool investor money to buy many notes and bills, providing instant diversification.
Popular funds in 2025 include:
- BIL: Very short-term Treasuries.
- SHV: Short-term Treasuries.
- IEF: 7-10 year Treasuries.
Pros:
- Instant diversification; no need to pick maturities.
- Liquidity—buy or sell anytime, just like stocks.
- Reinvest dividends easily.
Cons:
- Ongoing management fees (often minimal).
- Yield can vary as the fund manager trades in and out of securities.
- No fixed maturity date—funds roll over Treasuries as old ones mature.
Key Considerations and Strategies for Investing in Treasury Notes
Selecting the Right Maturity and Purchase Method
Choosing the right T-note depends on your financial timeline. If you need your money in a few years, stick with shorter maturities. Planning for a future expense in 10 years? Consider a long-term note.
Questions to ask yourself:
- When will you need the money?
- Do you want steady cash flow (longer maturities pay more, but your money is locked up)?
- How comfortable are you with interest rate changes?
Direct purchases make sense for simple needs. Brokerages fit if you want flexibility. ETFs are great for hands-off investing.
Tax Benefits and Implications
T-note interest is exempt from state and local taxes but taxable at the federal level. This can boost your after-tax yield, especially if you live in a high-tax state.
Keep in mind:
- Report your interest each year on your federal tax return.
- Your broker or TreasuryDirect will send you a 1099-INT at tax time.
Selling Treasury Notes Before Maturity
You’re not locked in until maturity. Brokerages allow you to sell your T-notes on the secondary market at current market prices.
But know this:
- T-notes can gain or lose value if interest rates move.
- Selling before maturity might mean getting less than you paid.
Make sure you understand the possible price changes if you’ll need access to your funds early.
Integrating Treasury Notes into Your Investment Strategy
T-notes act as an anchor in your portfolio. They lower overall risk and help balance out more volatile assets like stocks or corporate bonds.
Consider:
- Using T-notes for emergency savings or planned expenses.
- Mixing different maturities (a "ladder") for steady cash flow.
- Allocating a portion of your safe investments to T-notes for stability.
Conclusion
Treasury notes are an easy, trustworthy option for building a solid foundation in your investment plan. You can buy them directly from the government, through your broker, or as part of a fund—whatever fits your style. Their reliable payments, tax advantages, and safety make them stand out, especially when markets feel shaky.
Before you buy, look into your time horizon, tax profile, and liquidity needs. Review official resources like TreasuryDirect.gov and your broker's guidance center for real-time auction schedules and rates. With a thoughtful approach, T-notes can help you sleep better at night while your money works steadily in the background.