6. How to buy treasurys without paying a commission

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By Money Magazine staff

When you're buying supersafe T-bills, notes and bonds, why fork over fees that will eat away at already slim returns? Go to treasurydirect.gov and follow the directions for opening an account. You'll need to let the Treasury link to your bank account, so keep your bank info handy.

Once you're authenticated (usually a few minutes later), you'll be able to bid in auctions for Treasury bills, notes, bonds and TIPS (Treasury Inflation- Protected Securities). Sound intimidating? It's not.

"The big players end up setting the price," explains Stephen Meyerhardt of the Bureau of the Public Debt, an agency within the U.S. Treasury. All you do is submit what's known as a noncompetitive bid, and you'll get the same price that banks and brokers do.

Let's say you want to buy $10,000 worth of a 26-week T-bill. You'll see at the Web site that these bills are auctioned every Monday (except holidays).

Before the auction, place a bid online. After the auction, your bid will be accepted, and the Treasury will draw the money from your bank account. (It will draw less than $10,000; the exact amount depends on what the auction price is.)

And when the bill matures 182 days later? The Treasury returns the full face value of $10,000 (which includes the interest you earned) to your account automatically. --E.F.K.


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