How Do I Purchase Treasury Exchange Traded Funds (ETF)?
Exchange traded funds (ETFs) are investment vehicles that function like mutual funds but trade like regular stocks on the stock market. Therefore, they track major funds (such as the Dow or S&P500) as well as stocks of various industries (such as biotechnology or real estate funds called REITS).
Just like the name sounds, Treasury ETFs are ETFs that track treasury bonds. If you are interested in investing in treasury bonds but are unable to buy them directly, you can buy treasury ETFs, which are funds that invest in treasury bonds. Examples include iSHARES Lehman 1-3 Year Treasury Bond Fund (SHY), iSHARES Lehman 7-10 Year Treasury Bond Fund (IEF), and iSHARES Lehman 20+ Year Treasury Bond Fund (TLT), all from Barclays. The number of years included in the name of each treasury ETF corresponds to the maturation for each treasury ETF. In other words, that’s how many years after which you can cash in the ETF.
There are so many treasury ETFs to choose from. Google Finance and Yahoo Finance provide comprehensive lists and are good places to start your research.
If you have a discount brokerage account through which you manage your own investments be they in a traditional IRA, Roth IRA or some other individual investment account, purchasing treasury ETFs is simple. Once you have completed your research using some of the resources outlined in this article, you are ready to buy. Just log into your brokerage account, put in the ticker symbol for the particular treasury ETF(s) you are interested in, and make your purchase.
If you do not have a discount brokerage account, opening one is very easy and various financial institutions such as ING, Fidelity, Scwabb, and Scottrade offer such accounts. In some cases, such as with ING, there is no minimum amount required to open an account and for as little as $12 a month, you can make 12 fixed automatic investments in stocks or ETFs of your choice. The funds for your stock purchase are automatically debited from your bank account each month. For those who want to invest for the long-term and are interested in investing small fixed amounts each month, this is a good way to go.
If your investments are managed by a broker or an investment adviser, purchasing treasury ETFs is as easy as placing a call to your broker and telling him/her to buy you a particular treasury ETF. Since ETFs trade just like regular stocks, this should be a straight-forward request and one that can be easily carried out.
If you are have a 401(k) or 403(b) account with your employer, you should check if treasury ETFs are included in the choices of stocks available to you. If they are, then for most people you can log into your account and change your allocations accordingly. For others, it may require filling out a form with your human resources office.