A government bond, also called a treasury bond, is a savings bond issued, or sold, by a government. The money obtained from bond sales normally is used to support government projects and activities. A government bond usually offers a fixed interest rate, and at variable points of the term of the bond or at maturity, the bond can be paid in full with interest. Government bonds are generally considered a safe investment because they are guaranteed by the government. Because of the low risk of losing an investment, the yield on a government bond is often less than other types of bonds.

In the United States (U.S.), three basic types of government bonds include treasury bills—or T-bills, treasury notes and treasury bonds. The basic types generally are based on the maturity schedule of the bond. A treasury bill, for example, can be issued if the bond will mature in one year or less. Treasury notes have a longer maturity schedule of two to ten years. For a maturity of 10 years or more, the government can issue a treasury bond, with interest being paid semiannually. Each country has its own variety of bonds available. The governments in the United Kingdom (U.K.), South Africa and Ireland for example, offer several types of gilts, or bonds. These sometimes pay a fixed amount every six months until the gilt matures and the remaining balance is paid. Many gilts are actually held by insurance groups and pension funds.

Government bonds can have several advantages. For example, a government bond typically is a safe investment. These bonds also tend to provide a predictable return. While stocks may in the long-term out perform a government bond in terms of interest accrued, bonds guarantee a return—something not generally expected from a stock. Some bonds also may have tax advantages. In the U.S., interest on bonds is often tax deductible—a consumer holding a federal bond can claim the interest earned as a tax deduction, for instance.

Some government bonds have minimum purchase requirements. Bonds typically are available at brokerage or investment firms and banks. Government Web sites typically offer information on where to purchase bonds, minimum purchase requirements and maturity details.