Why do Investors Care?
Individual investors can participate in Treasury auctions through a securities dealer or via the Treasury Direct program. The Treasury Direct program saves on brokerage commissions, but the commission is nominal and eliminates a lot of paper work and administrative hassles. Brokers facilitate the purchases and sales of Treasuries in the secondary market, which is handy for buying Treasuries at times other than scheduled auctions or with maturities other than those offered by standard new issues.

Primer on Treasuries
Treasury securities, Treasuries, and Govies all refer to the same type of security, and are debt obligations of the United States. Maturity refers to the length of your loan to the government. Treasury notes have maturities of 2 to 10 years (2, 5 and 10 year notes are the most common). Since August 1998, the Treasury ruled that all securities it issues now have minimum denominations of $1,000.

How notes work
You pay $1,000 for a note. You receive interest payments every six months based on the coupon rate. If the rate is 6%, you get $30 every six months for a total of $60/year. When the note matures in five years, you get back the original investment of $1,000, called the principal.

Investment Profile
Treasuries offer a measure of security unmatched by other investments - the U.S. government guarantees your initial investment (the principal) and the interest payments. If a Treasury is held to maturity, though, inflation and opportunity risks remain. Inflation erodes the value of the principal and interest payments. Opportunity risk refers to what could have been earned had the money been invested elsewhere. This relatively low risk/reward profile for Treasuries applies only if they are held to maturity. If Treasuries are resold in the secondary market, their price could be more or less than the face value depending on inflation, Fed policy, and simple supply and demand forces for Treasuries.