How to Buy Corporate Bonds Without a Broker
Bonds are one of the only security types that you can purchase easily without using a broker. Bonds that aren't held in a brokerage account are more difficult to sell and trade, but doing so allows you to avoid any transaction fees. For investors solely interested in buying bonds as fixed income investments, doing so without a broker can be the most advantageous method. You must contact the bond issuer directly to order a bond without using a brokerage firm.
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Instructions
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Choose the company whose bonds you would like to purchase. Corporations issue bonds directly through the primary market, but it's extraordinarily difficult for most small investors to gain access to it. In most cases, corporations will not directly issue bonds without an underwriter, usually an investment bank. This is because most corporations lack expertise in how to price bonds and market them effectively. The primary market is illiquid relative to the secondary market upon which most bond trading takes place, as only major financial institutions have access to it.
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Monitor the primary bond market for the corporate bond that you would like to purchase. Typically, you must have an account at the investment bank that purchases corporate bonds from the primary market in order to get access to it. Examples of investment banks include Goldman Sachs, Deutsche Bank, JPMorgan Chase and Citigroup. To open a private investor account with an investment bank, you must typically be a high net worth individual willing to maintain an account balance of over $100,000.
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Purchase the bonds that you would like to add to your portfolio at the price offered. Bonds sold on the primary market and directly from government sources are typically less expensive than those offered by the secondary market. The bonds may increase in value over time, however, depending on market conditions and changes in the credit rating of the issuer.
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