How Much Can Be Invested in Treasury Bonds?
- The Treasury issues two types of savings bonds: series EE and series I. Savings bonds are individually purchased long-term savings certificates. These bonds will earn interest for up to 30 years. Savings bonds are individually registered and cannot be transferred to another owner. Series EE bonds earn a fixed rate of interest, which is determined when the bonds are purchased, and accrue interest at that rate until redeemed. Series I bonds earn and accrue interest at a rate adjusted for inflation. The current interest on a series I bond will change every six months based on an inflation factor. Both types of savings bonds can be purchased as paper certificates or in electronic form through the TreasuryDirect website (see Resources).
- The purchase limit for series EE and I savings bonds is $5,000 in a calendar year, as of 2011. This limit applies to each type of bond plus the two forms of each type of bond. An individual who wanted to purchase the maximum amount of savings bonds could invest $20,000 during the calendar year. The investments would be $5,000 worth of paper EE bonds, $5,000 of electronic EE bonds, $5,000 of paper I bonds and $5,000 of electronic I bonds.
- Marketable Treasury securities are issued in the forms of short-term Treasury bills, intermediate-term Treasury notes and long-term Treasury bonds. All forms of Treasury debt are often included in the generic use of the term Treasury bonds. Treasury securities are sold through an auction process with several types of bills, notes or bonds auctioned every week. All forms of Treasury securities can be purchased on the secondary market through a bond dealer or investment broker.
- The interest rate on Treasuries sold at auction is determined by a competitive bid process. Large financial and investment firms put in bids of how much of a specific security they want to buy and at what rate. One firm can buy a maximum of 35 percent of any auction through competitive bid. The Treasury also accepts non-competitive bids, which are filled at the average winning rates of the competitive bids. The maximum purchase amount of any auction with a non-competitive bid is $5 million. The Treasury auctions bills every week and longer-term securities up to 12 times a month, so a non-competitive bidding investor could buy approximately $100 million worth of Treasury securities every month.
