How to Buy Bonds Online

While buying bonds online isn't as easy as buying stocks online, it's cheaper to buy them from Web sites than from retail brokers.

Difficulty: Moderate

Instructions

Things You'll Need:

• Internet Access
• Brokerage Accounts
• Computers

1. Open an account with an online broker or dealer that sells bonds. Most dealers will require that you open an account with at least $5,000.

2. Deposit the required amount in the account by mailing a check to the broker or dealer.

3. Decide what type of bond you want to buy, then visit the Bond Market Association's Web site (bondmarkets.com) and check out yields and other features of the various bonds.

4. Check out other Web sites that list bond information, looking for the best total returns, not just the best yields.

5. Calculate a bond's "yield to call," or how much money you'll get if you redeem early. The higher the yield, the more money you'll make.

6. Indicate which bond you want to buy and how much you want to invest.

7. Keep in mind that the broker's commission is usually built into the bond price.

8. Await verification. The brokerage will verify that you have enough money in your account to cover the transaction, then it will buy the bonds.

9. Get confirmation of the purchase. You should receive a trade confirmation by mail several days after the bond has been bought.

10. Buy government bonds directly from the U.S. Bureau of the Public Debt Web site (publicdebt.treas.gov). If you buy bonds on this Web site, you can pay by credit card or a bank debit card, provided the bank card carries the MasterCard or Visa logo.

Tips & Warnings

• If you don't have enough money to buy individual bonds or if you want a diversified, laddered portfolio of bonds, consider investing in a bond fund, or a mutual fund that focuses on bond investments.

on 11/22/2005 Go to Munidirect.com. They have, by far, the best pricing and they are very easy to work with.