I've heard of government bonds and buying them at the post office. Is this a good investment?

I have a friend that invests in government bonds by buying them at the local post offce for 39$ and selling back his bond for 50$ after three months? I think this is rediculous; either he's lying or there's something fishy going on at the Post Office. Any advice?

It sounds like he's getting a bond with a discount. This would mean that there are no interest payments, just the value of the bond goes up as the interest is earned.

Government bonds are good investments for two reasons: 1) the government won't go bankrupt, they just print more money to pay off the debt, and 2) Federal bonds aren't subject to Federal income tax and State bonds to State income tax.

Government bonds are bad because they tend to pay a very low interest rate, so if you are comfortable with risk in an investment, buy a different bond, like a AAA rated bond.

lying indeed. $50 after many yrs perhaps. Avoid Savings bonds at all cost.

If you buy a Bond for $39.00 you will get about $41.00 after a year.

I don't know what country you are in but there is something very fishy about your friend. In the US, you can't buy bonds at the PO but I believe you can in the UK and Japan. In either case, the discount rate your friend is touting is absurd.

In the US, the 91 day rate on a treasury bill is about 5%. That means you could buy a treasury bill at $98.75 and three months later it would be worth $100.00.