how to buy bonds

Because bonds are sold in large units, you might only be able to purchase one or a handful of bonds on your own, but as a bond fund holder you’ll own stakes in dozens, perhaps hundreds, of bonds.
Fund managers are constantly buying and selling bonds in their portfolios to maximize their interest income and capital gains.
Because bond funds with similar investment objectives tend to hold similar types of securities, which perform similarly, there are only two ways a fund manager can goose the yield: cut expenses or take on more risk.

Login to your account and from the "My Accounts" page, click on the BuyDirect® tab, select Bonds, click on the security you wish to purchase, the purchase amount, and whether you wish to reinvest the security.
When you buy a bond in TreasuryDirect, we withdraw the purchase price from the source of funds that you specify, which could be one of your bank accounts or your Certificate of Indebtedness (C of I).
The system uses your preferred registration and the primary bank you identified in your account, and then schedules your purchase for the next available auction date.
To quickly figure how much money you are really going to earn when you buy a corporate bond look for the acronym (YTM).  The YTM tells you how much interest or yield you’ll receive from the time you buy the bond to the time it matures.  If you’re paying a premium for the bond, the rate at which the bond was issues (called the coupon rate) will be very different from the Yield-to-Maturity.  Let me explain, your bond search may find companies paying 5, 6, even 7 percent with maturities of two years of less.  But once you add in the premium, you’ll see those yields fall to 1.5% to 2.5% depending on the credit rating.  Again the lower the credit rating, the higher the yield you’ll receive.  On a regular basis I have a client or someone call and say their friend just picked up a bond paying 5% with a short maturity and they want some too.  So I usually have to walk them, and their friend, through YTM and how it works.
Corporate bonds typically trade at three price levels:  At a premium, a discount, or at par value.  Without going into too much detail, most bond buyers today have to pay a premium because we are in such a low interest rate market.  For example, there are bonds that mature in less than a year and have a coupon (yield) of 5%.  The trouble is, instead of paying $100 per bond, investors have to pay more for that rate.  That’s important because if you pay a premium, it reduces the income or yield you’ll receive from it since that portion won’t be included in the principal that is given back to you when the bond matures.
Fortunately, it’s become a lot easier over the years to buy bonds on your own.  Finding and selecting your first individual bond, such as a corporate bond, is a lot like doing a new home search on the Internet.  When you start a property search, you’re asked questions such as which city you want to live in, minimum and maximum you want to spend, how many bedrooms and bathrooms, etc.  You’ll find a similar format for purchasing individual bonds, including the option to keep your search as broad or as detailed as you like.  I suggest new bond investors begin their search focused on four key components.
Many investors have bought a stock or bond mutual fund as part of an employer’s retirement plan or their IRA.  Several have also bought their own individual stocks, but few have ventured into the area of individual bonds.  Individual bond investing is an area that’s becoming more popular among retirees and conservative investors who fear investing too much in bond funds (where they can actually lose principal in a rising interest rate market) and don’t want to lock their money up for an extended period in an annuity.
Finally, a bond’s maturity date is when the company will return your principal to you.  Typically, near the maturity date you will also find the bonds interest payments frequency.   The most common format is semi-annually (or two payment s per year).  Knowing the maturity date and payment frequency are important because investors may not want to extend the time they hold a bond beyond a certain point and you definitely don’t want to find out the bond your holding pays annually when you’re expecting a semi-annual payment.
When it comes to credit ratings, corporate bonds are classified into two distinct categories:  Investment grade or Junk bonds.  The division between the two comes at the BBB level.    Everything from BBB and above is considered investment grade, while anything BB and below is considered junk.    I suggest new investors stay within investment grade or venture no lower than BB.  You may be surprised to find some popular dividend paying companies in the BB range that you may already own in your IRA or through a mutual fund in your 401(k).  Either way, just as you diversify your stock investments, be sure to diversify your individual bonds as well, particularly in you go below investment grade.
However, if your bank doesn’t provide this service and you do not have a brokerage account, you can purchase government bonds through a government agency (this is true in most countries).
If you cannot afford this amount, we suggest looking at a mutual fund that specializes in bonds (or a bond fund).
If you do decide to purchase a bond through your broker, he or she may tell you that the trade is commission free.
You can also open an account with a bond broker, but be warned that most bond brokers require a minimum initial deposit of $5,000.
Find out when you can trade shares linked to the Dow Jones Industrial Average during NYSE and Nasdaq trading sessions.
Making the best decisions for your unique circumstances requires an understanding of the way bonds can be used to achieve a variety of your financial goals as well as a sense of how bonds are priced, the dynamics that drive the market and the various risks involved.
Once you decide to become a bond investor, you will face a series of decisions on what bonds to buy, how best to buy them, how long you want to hold them in your portfolio and when you might think about selling bonds.
The “Investor’s Checklist ” gives you a one-stop, interactive step-by-step guide to collecting the information you need to test and confirm your decisions before you invest or sell.
For the latest Fiscal Service news and information, please see "Hot Topics & What’s New" below.
An I Savings Bond is a security that earns interest for up to 30 years based on both a fixed rate and a rate that is adjusted twice a year for inflation.
A minor may not open an online account, buy bonds, or conduct other transactions.
To buy and own an electronic I bond, you must first successfully establish a TreasuryDirect account.
The adult can buy securities and conduct other transactions for the minor, and hold the securities in the minor linked accounts.
An adult custodian, such as a parent, may open an online account for the minor that is linked to the adult’s online account.
Note: In any one year, for any one Social Security Number, you can buy $10,000 per year in electronic I Bonds.
(For paper I bonds bought with your IRS tax refund, you can buy up to $5,000 per year, per Social Security Number).
If you have questions or comments please contact Morningstar.
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You can invest small amounts (sometimes as little as $25 at a time), sign up for an automatic investment plan (which transfers money from your checking account to your investment account), and achieve instant diversification (since a mutual fund owns thousands of bonds from hundreds of issuers).
The higher the rating, the higher the quality of the bond, with Treasury bonds being rated the highest and "junk" bonds being those with the lowest ratings.
Developed by third parties such as Standard and Poor’s and Moody’s, bond-rating services give bonds letter or mixed letter and number ratings based on the financial soundness of the bond issuer.
Investors can establish a single TreasuryDirect account that will hold all of their Treasury notes, bills, and bonds.
Bond ratings were developed as a way to indicate how financially stable the issuer of the bonds really is.
Fixed Income Securities Concession Schedule Secondary market Concessions per bond1 If traded online If traded with a representative U.S. Treasuries $0 $19.95/trade Other bond types offered online: Government agencies, municipals, corporates,2 and secondary market CDs $1.00 $1.00 New issues Concessions per bond1 If traded online If traded with a representative U.S. Treasury Auctions $0 $19.95/trade Other bond types offered online: New issue government agencies, municipals, corporates,2 and CDs Selling concession is included in the new issue price.
Players wanting to sell the Bond onto another player (Player C) will need to pay a 10% cost of its current Grand Exchange value.
Player A and Player B agree a trade for the Bond in return for in game items, currency or as a .
They are tradable directly player to player, or through the Grand Exchange for in-game wealth and can be securely gifted to a friend or fellow clan member to help get them on board.
The life cycle of a bond consists of 3 Simple Stages; Purchase, Trade, Consume.
Player A purchases a Bond from the Billing Page for real money.
This raises the question of why so many investors buy individual bonds rather than putting their money into bond funds.
One major reason is that brokers push individual bonds, telling clients that mutual funds are for small investors, not for them.
And as long as they hold their bonds to maturity, they’ll get their entire principal back — except in the unlikely event that a bond issuer defaults.
One of my favorite funds, Metropolitan West Unconstrained Bond M (symbol MWCRX), should lose little or nothing when rates rise because it’s deploying some of its assets to sell Treasuries short — that is, betting that they will fall in price.
You can sell at an outrageously low price or cross your fingers, hold the bonds until they mature and hope that inflation hasn’t eroded their value substantially.
No professional wants to buy the relatively small bond pieces that individual investors own, so no one offers remotely fair prices.
In truth, holders of individual bonds aren’t exactly complaining — or breaking down brokers’ doors to unload their holdings.
Strong demand, coupled with a more restrained supply of debt issuance and tame inflation, could bolster the U.S. bond market and mitigate the negative effect of higher rates on yields.
Bond-market experts also favor floating-rate bond funds, which hold shorter-term securities and can benefit as rates move higher.
“Parts of the bond market can actually do quite well in this world,” says Mark Kiesel, chief investment officer, global credit at Pacific Investment Management Co., or Pimco.
The two biggest exchange-traded funds that mirror the high-yield market are SPDR Barclays High Yield Bond ETF and iShares iBoxx $ High Yield Corporate Bond .
Economic gains benefit cities and states, as well as companies, and muni-bond valuations now don’t fully reflect the prospect of higher tax rates—a trend that would boost demand for these tax-free securities, says Anthony Valeri, senior vice president of fixed-income research at investment adviser LPL Financial.
When rates rise, fund inflows will trickle thus slowing the manager from buying new bonds to benefit from an elevated coupon.
Bond investors haven’t experienced a prolonged rise in U.S. interest rates in almost a decade.
Older investors in the U.S. and other developed markets want to generate income, and international buyers, particularly in growth-challenged Europe, find the 10-year Treasury yield attractive compared with government bonds in their own countries.
Be careful about using bond funds during periods of rising rates.
“The Fed is going to set the markets up for the normalization of rates,” says Rick Rieder, chief investment officer of fundamental fixed income at investment manager BlackRock Inc.
Still can’t find the bonds you want, or have any further questions? Call us at 800-FMS-BONDS (367-2663) or e-mail us at Our tax-free bond experts will assist you with the information you need.
This will take you to the "Bond Finder" page, where you will be given the opportunity to “View All Offerings” or choose to view only bonds from a particular category.
To access our offerings, click on the "Bond Offerings" button at the top left corner of any page.
If you would like to purchase the bonds, click on the "Buy Bond" button.
On the "Bond Search Results" page, you will see offerings listed in maturity date order.
After clicking on the "Buy Bond" button, you will be brought to the "Bond Order Preview" page.
California bonds finance investments in our schools, roads, housing, parks, levees, public facilities and other crucial infrastructure projects.
This site will be updated regularly to feature upcoming bond sales, with information specific to the types of bonds being offered.
If the child’s parents can’t or won’t open a TreasuryDirect account, you can still purchase the bonds, hold them in your own account’s "Gift Box," and transfer them at a later date.
You can of course buy bonds for yourself, and you can also use your refund to purchase savings bonds as gifts; just enter the recipient’s name on the form.
If you have your heart set on buying paper savings bonds, you can do so with your tax refund.
Savings bonds are commonly given as gifts, and you can still purchase bonds for somebody else – whether you buy online or with your tax return.
You can still redeem paper savings bonds at most financial institutions, but getting new ones is not as easy as it used to be.
There is even a “Purchase Express” form on the welcome page if you make a habit of buying savings bonds.
The Treasury Department has a nice website for buying savings bonds.
Your paper bonds will be mailed to you, and you can eventually redeem them at a bank or credit union that works with savings bonds.
I personally had a smooth experience when I bought savings bonds at Treasury Direct, but others have been less fortunate.
If you’re looking to buy savings bonds for yourself or as a gift, let’s review what your options are under the new rules.
To buy a bond as a gift, you’ll use your own TreasuryDirect account, but the recipient needs his or her own account to receive the gift (this is the main drawback of the online system).