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What are Treasury Notes, Bonds, FRNs, and TIPS?

I would like to invest my money in something very safe for a short period of time. I heard that the U.S. Government has several options, including Notes, Bonds, FRNs, and TIPS. What's the difference between these options?

Posted November 17, 2021 by at United States in Investing
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Treasury notes and bonds are securities that pay a fixed rate of interest every six months until the security matures, which is when Treasury pays the par value. The only difference between them is their length until maturity. Treasury notes mature in more than a year, but not more than 10 years from their issue date. Bonds mature in more than 10 years from their issue date.

An FRN is a security that has an interest payment that can change over time. As interest rates rise, the security's interest payments will increase. Similarly, as interest rates fall, the security's interest payments will decrease. Treasury FRNs will be indexed to the most recent 13-week Treasury bill auction High Rate prior to the lockout period, which is the highest accepted discount rate in a Treasury bill auction.

Treasury also sells Treasury Inflation-Protected Securities (TIPS). They pay interest every six months and the principal value of TIPS is adjusted to reflect inflation or deflation as measured by the Consumer Price Index - the Bureau of Labor Statistics' Consumer Price Index for All Urban Consumers (CPI-U). With TIPS, the semi-annual interest payments and maturity payment are calculated based on the inflation-adjusted principal value of the security.

Added: November 17, 2021