treasury
Government-issued debt securities used to finance government spending; also refers to the government department managing public finances.
Example
“She bought 10-year Treasury bonds as a safe, low-risk investment.”
Memory Tip
TREASURY is where the government keeps its TREASURE — and where it borrows money by selling bonds.
Why It Matters
Treasury securities are among the safest investments available because they are backed by the U.S. government, making them crucial for conservative investors building wealth. Understanding treasuries helps you evaluate your investment options and comprehend how government borrowing affects interest rates and inflation, which directly impact your savings and loan costs.
Common Misconception
Many people believe that buying treasury securities means lending money directly to the government for specific projects, but in reality treasuries simply represent general government debt used for all spending. Another misconception is that treasuries offer high returns, when they actually provide lower yields than stocks because of their lower risk profile.
In Practice
If you purchase a 10-year Treasury bond for 10,000 dollars at a 4 percent annual interest rate, you will receive 400 dollars each year for 10 years and get your 10,000 dollars back at maturity. Meanwhile, the government uses money from all treasury sales to pay for military operations, infrastructure, Social Security, and other programs, regardless of what individual buyers might assume about their money.
Etymology
From Old French 'tresorie' from 'tresor' meaning 'treasure' — where the government's treasure is kept.
Common Misspellings
Start investing with no commission trades
Related Terms
More in investing
Other investing terms you should know
See Also
Need financial definitions?
Clear definitions for 2,500+ finance, insurance, and investing terms.