A must-read for beginners: Consider these 3 factors when looking at beauty bonds.

U.S. Treasuries, commonly known as 'U.S. Bonds,' are praised as one of the 'most liquid and safest assets in the Global market,' and are favored by governments and large investment institutions worldwide.

You might want to invest in U.S. Bonds, but have doubts such as: who is suitable for investing in U.S. Bonds? And how to select and Trade them?

Next, we will answer these doubts one by one.

1. Quick Overview: What are U.S. Bonds?

As the name suggests, U.S. Bonds are debt securities issued by the U.S. government to raise funds for daily operations or large development projects. In simple terms, buying U.S. Bonds is equivalent to lending money to the U.S. government; individual investors can also Buy and Sell, in addition to institutional investors.

There are two ways to profit from investing in U.S. Bonds:

The first is to Hold until maturity, receiving stable interest during the holding period and recovering the principal after maturity. Based on this, U.S. Bonds have a stronger risk resistance compared to Stocks, making them a common hedging asset.

The second is to earn the price difference by purchasing low and selling high, similar to Stocks. However, due to the lower price volatility of U.S. Bonds compared to Stocks, most people invest in U.S. Bonds to achieve stable returns with low risk or to hedge against risks.

According to different maturities, US Bonds are divided into three types:

1. Those with a maturity of 1 year or less are short-term;

2. Those with a maturity of less than 10 years are medium-term;

3. Those with a maturity of more than 10 years are long-term.

Except for short-term US Bonds, which do not pay interest before maturity, medium and long-term US Bonds pay interest once every six months.

At this point, some may wonder: Most US Stocks and ETFs require withholding tax on dividends; do US Bonds also require withholding on interest payments?

Currently, investing in US Bonds through Futu allows the interest earned to be credited in full, without any withholding tax. This is also one of the advantages of directly investing in US Bonds.

2. How to select US Bonds?

The USA government issues new medium to long-term Bonds every month, but different maturities of US Bonds have different interest rates and prices. Which one to choose is better?

Key factors to focus on are: maturity date, purchase price, and coupon interest rate.

Maturity date.

Although they are called medium to long-term government bonds, they may have been issued several years ago, and the actual time until maturity is no longer far away. Therefore, after buying US Bonds, how long can they be held and how many times interest can be received need to be checked against the maturity date.

Purchase price.

As the name implies, the purchase price is the price of the Bonds when buying them now. Taking Futu as an example, when we enter the trading page for Bonds, we can see: the midpoint price, buy price, and sell price.

Similar to trading Stocks, you can set an Order price yourself, but after submission, it may not be executed immediately, or it may even fail to execute. Some Bonds offer fast buy and sell prices, so if you want to execute quickly, you can refer to these two prices for trading.

Coupon interest rate.

The coupon interest rate, abbreviated as coupon, is the annual payout rate. If $1,000 is invested to buy a US bond with a 5% coupon, a total of $50 in interest can be earned over one year.

3. How to invest in US bonds?

It is very simple for ordinary people to invest in US bonds. Through Futu, one can quickly view the yield to maturity of different maturities and coupon rates, as well as real-time Ask quotes. Open the Futubull app, click on 'Wealth Management', and select 'Bonds.'

For beginners, directly entering the 'Quick Buy Bonds' page allows for easy filtering of bonds by coupon rate, yield to maturity, and other conditions. And all displayed bonds offer rapid trading functionality, no waiting required, allowing immediate transactions with one click.

If you want to see more US bonds, return to the 'Bonds' homepage, find the 'US Treasury Bonds' section, and click in to find the list of US bonds. Clicking the Filter button above allows for further filtering by yield to maturity, coupon rate, and remaining years.

If you want to gain medium to short-term capital appreciation, consider US bonds with longer remaining years, as these bonds have relatively larger price fluctuations.

Advanced investors can also refer to the bond's duration to determine the sensitivity of the bond's price to interest rate changes. Selecting specific US bonds will display the Macaulay duration and modified duration. Simply put, the larger the number, the higher the sensitivity of the bond's price to interest rates.

On this page, the latest buy and sell quotes for the bonds can also be seen, along with historical price and yield trends.

Click “Buy” or “Quick Buy” to place an order immediately.

It should be noted that:

1. The trading hours for Bonds are from 9:00 to 17:00 on trading days, and orders placed during non-trading hours will fail.

2. Each US bond has a face value of 100, so the order quantity must be a multiple of 100, with a minimum trading quantity of 10 bonds, which is 1000 in face value.

This video concludes here. We will introduce how to calculate the yield of US bonds and the costs involved in trading US bonds in the next video.

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