Do you ever feel confused about how much you can buy in savings bonds or Treasury marketable securities each year? Don’t worry, it’s not as complicated as it seems! Let’s break down the rules and help you understand your investment options.

Savings Bonds: It’s About the Type and How You Buy Them

When it comes to savings bonds, the amount you can buy depends on whether you’re purchasing electronic or paper bonds.

Electronic savings bonds, which you can buy through TreasuryDirect, have a separate purchase limit for each calendar year. You can establish a TreasuryDirect account using your personal details and bank information.

Paper Series I savings bonds can only be purchased with your IRS tax refund, and they have a different purchase limit.

A key thing to remember: Gifts don’t count towards your annual limit. If you transfer or gift electronic savings bonds, the limit applies to the recipient in the year they receive them.

So, to summarize: you have three separate limits – one for electronic Series EE bonds, another for electronic Series I bonds, and a third for paper Series I bonds. You can buy up to the maximum limit for each type of bond in a single year.

Treasury Marketable Securities: A Limit Per Auction, Not Per Year

For marketable bills, notes, bonds, Floating Rate Notes, and Treasury Inflation-Protected Securities (TIPS), the purchase limit is set for each auction, not on an annual basis.

The noncompetitive purchase limit is $10 million per security type and term for each auction. This means you can invest up to $10 million in each of these securities, no matter how you buy them: through TreasuryDirect, a broker, or a dealer.

For example: you could buy $10 million in each of the following:

• 4-, 8-, 13-, 26-, and 52-week Treasury bills
• 2-, 3-, 5-, 7-, and 10-year Treasury notes
• 5-, 10-, and 30-year Treasury TIPS

A Household Limit for Noncompetitive Bids

There’s also a household limit to consider. This applies to people living at the same address, including spouses and children under 21.

Everyone in the household needs to track their bids to make sure they don’t exceed the $10 million noncompetitive limit per auction.

For example: a husband, wife, and their 18-year-old child living together can’t bid more than $10 million in total. However, a 21-year-old living at the same address can place a separate bid up to the $10 million limit.

Reinvestment Doesn’t Count Towards the Limit

TreasuryDirect offers an automatic reinvestment option. When you buy a bill, note, bond, or Floating Rate Note, you can schedule reinvestment of the proceeds. This does not count towards your purchase limit.

However, TIPS cannot be reinvested through TreasuryDirect.

Zero-Percent Certificate of Indebtedness (C of I)

A Zero-Percent C of I is a special security you can use to accumulate funds for buying other securities in TreasuryDirect. It’s issued daily with a one-day maturity that automatically rolls over.

You can fund your C of I in several ways:

• Depositing proceeds from other securities (like interest, redemptions, or maturing proceeds)

There’s no limit on how much you can hold in your C of I. However, you can only withdraw $1,000 per transaction from your designated bank account.

Simple Rules for Successful Investing

Now that you’re aware of these simple rules, you can avoid exceeding any purchase limits. Remember to check the purchase limits for each type of security and keep in mind the household limit for noncompetitive bids. With a little attention, you can invest confidently in savings bonds and Treasury marketable securities.