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TREASURYS
What are they?
Basically, government IOUs: Treasury bills, notes, and bonds bought and sold on the open market. Also available: Treasury inflation-protected securities, or TIPS.
How much can you buy?
$1,000 and up.
What about taxes?
Interest on Treasurys is exempt from state and local income taxes.
Risks
Prices of Treasury securities, like those of other bonds, move in the opposite direction of interest rates. So if interest rates have risen since you bought your security, you'll get less than you paid for it if you sell. On the other hand, if rates have fallen, you'll get more. Current rates range from 2 percent to a little more than 4 percent, depending on maturity.
SAVINGS BONDS
What are they?
Savings bonds, like Treasurys, are IOUs of the federal government, generally aimed at small investors. They can be bought in either paper or electronic versions.
How much can you buy?
As little as $25 for a Series EE paper bond. Individuals may not purchase more than $5,000 of each kind of bond -- EE paper and electronic, I paper and electronic -- for a total annual limit of $20,000. Series EE bonds are paying 3 percent.
