When you want a safe investment, bonds can be exactly what you seek. Although the news focuses primarily on the stock market and online discount brokers make buying stock online look very easy, it is just as easy to buy bonds as it is to buy stock. All you need to do is set up an account and either have your bank wire the money or have your broker charge your bank.
- Skill level:
- Moderately Easy
Treasury Direct is the place to go if you want to buy Treasury Securities such as T-bills, T-Notes and T-Bonds, as well as some of the other securities offered by the U.S. Treasury.
Any of the top online brokerage firms such as TD Ameritrade, Charles Schwab, Scott Trade or eTrade (see Resources below) can supply you with bonds. You can buy either individual bonds or a high-quality bond mutual fund.
Any of the top banks can also sell you bonds via their online banking services. Banks are particularly good places to go if you are interested in buying Treasury Bonds or Municipal Bonds.
Places to Buy Bonds Online
Tips and warnings
- If you are a novice bond buyer, you may wish to make use of whatever advice the Client Service Reps can give you. Make sure you know what maturity you will need because, though it is easy to sell bonds, depending on the interest rate environment there is a likelihood you will not be able to sell your bonds for what you paid. You should also know whether you want Treasury, Corporate or Municipal Bonds.
- The interest rate you will receive will be a reflection of the quality of the bond, so if you want the safest AAA investments, be prepared for a low interest rate. If you feel you can accept a slightly riskier investment, such as a AA or A, you will still be purchasing a very high-quality bond but the interest rate might be a bit higher. However, if you see an interest rate that is considerably higher, remember that the investment risk is also considerably higher.
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