I'm talking here about U.S. Treasury Bonds, or U.S. Treasuries, depending on how you want to look at it.

A U.S. Treasury is basically a loan by an individual, corporation or a country to the United States, in which they are offered a return on their investment over a certain agreed upon period of time.

The government takes the borrowed money and spend it in what they deem the best allocation of the capital.

The length of that period of time determines what the name of that particular investment instrument is. In relationship to Treasuries, there are four different kinds to talk about.

Technically, all of these four could be listed as an United States Treasury security.

There are two reasons a person would want to invest in a treasury security, and that is for safety and tax purposes, although contrary to popular opinion, there are risks with bonds, but not the type of risk we associate with stocks and commodities or other financial investments like that.

As far as taxation goes, while Treasuries are subject to Federal taxes, they are exempt from state and local taxes, giving you a nice benefit there.

Safety is a big plus as well; the reason you don't get a large return on your investment. Treasury securities are more to conserve your investment rather than significantly increase it. 

There are four types of Treasury securities or government bonds, including Treasury Bills or otherwise known as T-Bills; Treasury Notes or also called T-Notes; and Treasury Bonds, which are also known as long bonds or T-Bonds.

The final Treasury security is called Treasury Inflation Protected Securities (TIPS), and they are a bit different than the other three, but still part of the Treasury securities investment family. 

Remember that all the above Treasury securities are the same, other than they have different maturity lengths, with the exception of TIPS. TIPS have one other element that's different, and we'll get into that in a little while.

As far as Treasury Bills or T-Bills go, their length of maturity is a year or less, and because of that are considered probably the safest investment available in the U.S.

All of these are backed by the U.S. government.

While all T-Bills will mature a year or under, there are several lengths of Treasury Bills offered, and so you would need to decide on which works best for you.

This is usually the first place someone would look for investment bonds. 

If you're looking at buying bonds, the next maturity length in bond trading is the Treasury Note or T-Note.

A T-Note is defined as a Treasury security which matures from two to ten years. Most of the Treasury Notes offered are at intervals of two, three, five, seven and ten years. That's sometimes subject to change, but they'll never go over 10 years to maturity.

When you hear bond prices being quoted, the 10 year treasury note is usually the price you're hearing, unless a different security is explicitly identified. 

Another level of investment bonds is the Treasury Bond or T-Bond.

If you're going to buy bonds like these, you'll be looking at maturity lengths from twenty years to thirty years.

Investors, whether individual, institutional and pension funds, look for long-term stability, and so invest in the 30-year treasury bonds, which the government stopped issuing for several years, but brought them back in 2006 because of demand. 

Treasury inflation protected securities or TIPS for short, are offered at maturities of 5-years, 10-years and 20-years.

What's great about this is they are a great, safe investment, but without the risk associated with other bonds of inflation, which when high, can eat away at small returns with nothing you can do about it.

At times of low inflation this isn't as important, but because inflation moves in cycles, you will eventually be hit hard sooner or later. But Treasury inflation protected securities protect you from that as they are adjusted to the Consumer Price Index, which is used to measure the rate of inflation.

So if your Treasury security ever falls below the inflation rate, it is adjusted upwards to the current level. Nice!

TIPS bonds are a very good place to put money you want to keep safe and also from being eaten away be inflation.

Some people also call these Treasury inflation bonds.  

Like anything else, it depends on your personal goals. The thing to understand is this is a safety market, and treasury bills, notes, bonds, and even TIPS, won't build wealth over the long term, but it will definitely conserve wealth, and in the case of Treasury Inflation Protected Securities, can at least keep up with inflation.

A Treasury bond yield or rate will never be high, and as long as you understand what the bond market is and whether investment bonds are right for your wealth conserving strategy, you won't be disappointed or surprised.

This doesn't mean bonds could never incrementally build wealth, but it would mean that inflation would have to be well below the bonds yield to build any type of wealth, and that would take a long time either way.
    
When it come down to it though, bonds are more for conserving wealth than anything else, and should be thought of in that way more than for any other purpose. 

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