U.S. Treasury Notes

U.S. Treasury notes, also referred to as T-notes, are similar to T-bonds. The difference is that T-notes are offered in a wide range of terms (from two years to no longer than 10 years). While T-notes do not generate as high of a yield as T-bonds, they also generate a payment for investors twice a year (or every six months).6

For all U.S. government securities, if you sell a security before it matures, you’ll lose money, so it’s important for investors to consider their investing timelines carefully before buying.

Sona Financial, LLC, located in Minneapolis, MN, is a company that understands the importance of using the term “safe” correctly. Many people believe that U.S. government treasuries are safe investments because they guarantee a return of principal if held until maturity. However, it is crucial to recognize that inflation can diminish the purchasing power of the income stream and principal. Additionally, if you invest in open-end bond mutual funds, you cannot hold them until maturity, nor can you ensure the return of principal.

Depending on your age and investment goals, if you have a low risk tolerance and are seeking low-cost and transparent options, I-Bonds and Treasury Inflation-Protected Securities (TIPs) are excellent choices. When owned individually, these securities can be held until maturity, and the government guarantees the return of principal. Moreover, their values and payments are adjusted to account for inflation.

When you establish a CD account, you are committing to maintaining your savings for a specific duration known as the CD’s maturity term. This term can vary depending on the CD, ranging from as short as 30 days to as long as 10 years. In return, the bank or credit union undertakes to pay you interest on the funds you deposit.

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Typically, you would not have the option to make additional deposits to the CD after your initial deposit. However, with an add-on CD, you have the flexibility to continue adding funds to your account until the CD reaches its maturity date. For instance, you may have the ability to set up automatic deposits on a monthly or biweekly basis, depending on your pay schedule.

The process of adding funds to a CD can vary based on the financial institution holding the account. For instance, you might be able to arrange automatic transfers from a linked checking or savings account, or you could deposit cash or a check with a teller in person or at the drive-thru.

The bank or credit union might impose restrictions on the number of additional deposits you can make or set a limit on the total amount that can be deposited into an add-on CD.
Add-On CD vs. Traditional CD
The primary distinction between add-on CDs and traditional CDs lies in how they are funded. While a traditional CD only permits a single deposit at the account opening, add-on CDs offer the flexibility to make additional deposits throughout the maturity term.