U.S. Treasury securities-such as bills, notes and bonds-are debt obligations of the U.S. government. When you buy a Treasury security, you are lending money to the federal government for a specified period of time.

Because these debt obligations are backed by the "full faith and credit" of the government, and thus by its ability to raise tax revenues and print currency, U.S. Treasury securities are considered the safest of all investments. They are viewed in the market as having no "credit risk," meaning that it is virtually certain your interest and Principal will be paid on time.

Because of this unique degree of safety, interest rates are generally lower than for other widely traded debt, such as Corporate Bonds.

The amount of marketable U.S. Treasury securities is huge, with $4.1 trillion in outstanding bills, notes and bonds as of December 31, 2005. The Treasury market is the most liquid debt market, meaning it is the one where pricing and trading is more efficient. Trading in U.S. Treasury securities occurs virtually 24 hours a day all over the world. In 2005, the U.S. Treasury estimated that 4% of bills, notes and bonds were held by individuals, 8% by banks and mutual funds, 7% by pension funds, 52% by foreign interests, 5% by state and local governments and 24% by other investors.

The focus of this section is on marketable Treasury securities, those that are of most interest to individual investors because they trade on the open market. There are other classes of Treasury debt-called non-marketable securities-that are not transferable but can be purchased from and redeemed by the government. U.S. Savings Bonds fall into this category, and, even though they are non-marketable, are discussed here because they are designed for individual investors.