Zero coupon Treasury notes
Terry, can you tell me the difference between treasury notes and 0 coupon treasury notes ?
I already have an account and own t bills, but would like to invest long term, 10 years.
Always appreciate your advice.
Thank you.
Terry Says
Zero coupon Treasuries are sold at a discount, much like I-bonds. You don’t buy them through Treasury direct, but though a broker or mutual fund. For example, American Century Funds has a series of zero coupon Treasury funds.
BUT — these should only be purchased INSIDE a qualified retirement account, where taxes are not a consideration. Otherwise you’ll get a 1099 year year for the increased value of the fund or bond, based not on distributed income but on the appreciation based on the interest that is presumed to have been earned!
Yep –it’s complicated. So only buy these zeros inside an IRA!
