The Best Places to Buy Corporate Bonds

In order to buy corporate bonds, you have to know where to look. Buying corporate bonds is not quite as simple nor popular as buying a share of stock. However, there are some places that you can buy corporate bonds regardless of the size of your trading account and trading experience. Here are some of the best places to buy corporate bonds. 

Initial Offering

The first place that you could buy corporate bonds is at the initial public offering when the company makes them available. This is typically done through an investment bank such as J.P. Morgan or Goldman Sachs. When you buy bonds when they are initially offered, you are buying them directly from the company and paying a cheaper price for them. This effectively cuts out the middle man and gives you the best return on your investment.

However, it is not easy to get involved in this primary market. Typically, you have to have a high net worth and plenty of capital to trade. You usually have to have an investment account with the investment bank that is offering the bonds. The account minimum is typically $100,000. This eliminates a good percentage of the population that would like to invest in corporate bonds. Although, if you can afford it, this is the best place to buy corporate bonds.

Bond Brokers

For those who do not have $100,000 to invest, bond brokers are another way to go when you want to buy bonds. Bond brokers make a career out of connecting those that have bonds to those who want them. Bond brokers can help you locate bonds that fit your investment objectives and get them for you as quickly as you want.

The drawback to using a bond broker is that they typically require a deposit of $5000 to open an account with them. This also eliminates quite a few people in the marketplace. Another drawback of using a bond broker is the spread that they charge. The spread on a bond purchase is the difference between what they buy a bond for and the price that they sell it to you for. Sometimes, this spread can be quite large, but you really have no way of knowing. This makes finding an honest bond broker a real priority when you want to employ this trading method.

Exchange

Although trading bonds on an exchange is not as common as other methods, it is possible now. The New York Stock Exchange has a bond division that allows you to buy and sell bonds. You can log on to its trading platform and look at many different corporate bonds that are available. You can get real-time price quotes on bonds, and if you find one that you like, purchase it immediately. This provides a certain level of transparency in your investments and allows you to do your own research.  

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