Treasury STRIPS may be right for you, safe investment that doesn’t pay interest

Why Treasury STRIPS may be right for you
Why Treasury STRIPS may be right for you

Here’s why Treasury STRIPS might be right for you:

  • STRIPS, Separate Trading of Registered Interest and Principal of Securities, are zero coupon bonds.
  • Their popularity is due to them being backed up by the U.S. government, making them a safe investment.
  • They’re fixed-income securities that don’t pay interest and are sold at a big discount to face value.
  • Let’s say you $850 for a STRIP and it matures at $1,000 in three years, the $150 is your gain.
  • Even though you don’t get interest each year like U.S. treasuries, you still pay accredited interest.
  • The solution? Hold STRIPS in your IRA or 401(k) where the growth is tax deferred.

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