Minimum Purchase Amount for Treasury Securities

The minimum purchase amount for Treasury securities is $100 at auction and in the secondary market. You can buy Treasury bills, notes, and bonds in increments of $100 (up to $5 million per account per auction) through TreasuryDirect or a broker. Treasury bond funds and money-market funds allow investments below $100, down to $1 or even fractional shares.

The $100 Par Denomination

The U.S. Treasury issued all bills, notes, and bonds in denominations of $1,000 historically. In January 2005, the minimum dropped to $100 (par value) to increase retail accessibility. Today, every new Treasury issued through auction has a $100 minimum par value.

This means:

• At auction, your smallest purchase is $100.
• In the secondary market (from a broker), the minimum is also $100.
• You can buy in increments of $100 thereafter ($200, $300, $10,000, etc.).
• The maximum per TreasuryDirect account per auction is $5 million.

The $100 figure refers to the par value or face value. At maturity, a $100 Treasury note pays back exactly $100 principal (plus any final coupon payment). When you buy at auction, you pay the par value (technically you may pay a slight premium or discount depending on the auction clearing yield, but the denomination remains $100).

Purchasing Through TreasuryDirect

TreasuryDirect is the U.S. Treasury’s direct-to-public platform. Buying is straightforward:

1. Create an account at treasurydirect.gov.
2. Fund it from your linked bank account.
3. Submit a bid in $100 increments (e.g., $500, $1,000, $5,000).
4. After the auction, your purchased Treasuries are held in your account.

There is no minimum account balance, no monthly fees, and no brokerage commissions. You are buying straight from the source.

Non-competitive bids are easiest: you bid a dollar amount, the auction clears, and you receive your Treasuries at the clearing yield. Competitive bids require specifying a yield you are willing to accept; if the auction clears at a higher yield (lower price), your bid is rejected.

Secondary Market Purchases

Once Treasuries are issued, they trade on the secondary market. Banks, dealers, and investment firms quote bid-ask spreads on existing Treasuries. You can buy any outstanding Treasury through a broker (e.g., Fidelity, Charles Schwab, TD Ameritrade) or a bank with a treasury desk.

The $100 minimum applies here too. A broker will sell you $100, $500, or $10,000 of a specific Treasury, depending on what is available. However, brokerage prices may include a markup or commission that is not present at auction.

The advantage of the secondary market is choice: you can buy any maturity (e.g., a 10-year note issued six months ago) on any business day, not just on auction days. The disadvantage is slightly higher cost and the possibility of execution risk if the market moves while your order is being filled.

Fractional Shares Through Funds

If you want to own Treasuries with less than $100 capital, or in fractional amounts, use a Treasury fund.

Treasury bond funds (mutual funds or ETFs) pool investor capital and buy Treasuries in bulk. You buy shares of the fund, not Treasuries directly. Minimum investments in Treasury mutual funds range from $1 to $3,000 depending on the fund. Bond ETFs allow you to buy a single share at market price (often $40–$50 per share), giving even more flexibility.

Treasury money-market funds hold short-duration Treasuries and other cash-equivalent securities. Minimums are often $1,000 or less.

These funds do not give you direct ownership of individual Treasuries; you own a pro-rata stake in a portfolio. But they allow low dollar investment and automatic reinvestment of interest.

Price Mechanics and the True Cost

When you buy a Treasury at auction or in the secondary market, the quoted yield determines the actual price you pay. Here is an example:

Suppose a 10-year Treasury note has a 4% coupon (annual). If the auction clears at a 4% yield (matching the coupon), you pay par: $100 per $100 of face value. You buy $5,000 face value and pay $5,000.

If, instead, the auction clears at 4.5% yield (higher than the 4% coupon), you pay a discount:

• Price = Par × (Coupon / Yield) ≈ $100 × (4% / 4.5%) ≈ $98.77.
• You buy $5,000 face value but pay $4,938.50.

Conversely, if rates fall and yield drops to 3.5%, you pay a premium:

• Price ≈ $100 × (4% / 3.5%) ≈ $101.27.
• You buy $5,000 face value and pay $5,063.50.

The $100 minimum applies to the face (par) value, not the market price. You always buy in increments of $100 of par, but the cash you exchange depends on the prevailing yield and market price.

Effective Minimums for Different Investors

For most individual investors, the practical minimum is:

• TreasuryDirect auction: $100 (no fees, direct from the Treasury).
• Secondary market via broker: $100 + brokerage markup (usually 0.1–0.25% of trade).
• Treasury mutual funds: $1,000–$3,000 (depending on the fund family).
• Treasury ETFs: Cost of one share (typically $40–$60) plus a brokerage commission if not commission-free.

Large institutional investors who buy Treasuries in size sometimes negotiate tighter spreads or buy amounts well above $100, but the stated minimum is still $100 even for them.

Tax Implications of the Minimum

The $100 par minimum does not affect tax treatment. All Treasuries are subject to federal tax on interest income, but not state or local tax. Whether you buy $100 or $10,000, the tax rules are the same: you report coupon income annually and any capital gains if you sell above or below your cost basis.

See also