Buying bonds is a lot like buying stocks. You just get in touch with your broker, set up your account, and place your order.
If you already have an account with a broker, whether landbased or Internet, you shouldn’t have to fill out any additional paperwork to buy a bond. The one account should allow you to purchase stocks, bonds, and mutual funds as well. Unless you are going to concentrate most of your investment money in bonds, there’s usually no need to select a broker who specializes in this kind of security. You do, of course, have to pay for any bonds that you purchase. You pay in the same way and timeframe as with stocks (within three days of placing the buying order). Fortunately, you don’t get charged much in the way of miscellaneous fees when you buy bonds. These fees vary with the brokerage, but in almost all cases they are very small (sometimes less than $1 per transaction).
Commissions on bonds are about in the same range as those for stocks — high with full-service brokers and lower with discount and Internet brokers. Because investors show much less interest in bonds, competition has not yet brought bond commissions down to the very low levels that are paid for stock transactions on the Internet.
The Internet doesn’t have many Web sites devoted to information about investing in bonds. There is, however, one outstanding site that more than makes up for the lack of numbers: the Bond Market Association site at www.investinginbonds.com. This Web site offers advice on buying bonds, explains how bonds fit into a balanced portfolio, and answers just about any question you might have about bonds.
Bonds trade on a type of OTC market, and most trade without securities symbols you see on securities that are traded on an organized stock exchange, like the New York Stock Exchange. Therefore, the investor has to tell the broker the type (tax or tax-free), how long (time) the investor will hold the bond, and state the investor’s risk parameters. Most brokerages (discount and full-service) maintain a bond-trading department in order to meet varied customer needs and preferences.
If you already have an account with a broker, whether landbased or Internet, you shouldn’t have to fill out any additional paperwork to buy a bond. The one account should allow you to purchase stocks, bonds, and mutual funds as well. Unless you are going to concentrate most of your investment money in bonds, there’s usually no need to select a broker who specializes in this kind of security. You do, of course, have to pay for any bonds that you purchase. You pay in the same way and timeframe as with stocks (within three days of placing the buying order). Fortunately, you don’t get charged much in the way of miscellaneous fees when you buy bonds. These fees vary with the brokerage, but in almost all cases they are very small (sometimes less than $1 per transaction).
Commissions on bonds are about in the same range as those for stocks — high with full-service brokers and lower with discount and Internet brokers. Because investors show much less interest in bonds, competition has not yet brought bond commissions down to the very low levels that are paid for stock transactions on the Internet.
The Internet doesn’t have many Web sites devoted to information about investing in bonds. There is, however, one outstanding site that more than makes up for the lack of numbers: the Bond Market Association site at www.investinginbonds.com. This Web site offers advice on buying bonds, explains how bonds fit into a balanced portfolio, and answers just about any question you might have about bonds.
Bonds trade on a type of OTC market, and most trade without securities symbols you see on securities that are traded on an organized stock exchange, like the New York Stock Exchange. Therefore, the investor has to tell the broker the type (tax or tax-free), how long (time) the investor will hold the bond, and state the investor’s risk parameters. Most brokerages (discount and full-service) maintain a bond-trading department in order to meet varied customer needs and preferences.
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