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There’s no reason to hand money over to a middle man when you can get the goods, at. no charge, direct from the source, right? Say you wanted to follow the advice that Charles Self, of LaSalle Street Capital Management, gave on taking the fixed-income plunge at our investment roundtable last month (see “And What For an Encore?” April 1997), and decided to buy a U.S. Treasury note. It simply makes no sense to pay a broker if Uncle Sam is willing to process the transaction gratis.
Let’s do the math: dealing with a discount broker, a purchase of a five- year Treasury at $5,000, yielding 6.25%, is going to cost you $49 in fees. If your first-year yield is $312.50, you’ve in essence surrendered 16% of your income in commissions. The solution? By calling your regional Federal Reserve bank (call 202-452-2600 to find the bank nearest you) or the Bureau of Public Debt Public Information Center (202- 874-4000), you can open a Treasury Direct account, at no charge, that will allow you to buy U.S. Treasury bonds cost- You’ll get a kit in the mail, complete with an application form and a booklet, Buying Treasury Securities. Your account opens the minute you purchase your bond, and better yet, you won’t pay the middle man a dime.