How to Invest in Bonds or CDs
Bonds and certificates of deposit (CDs) are considered fixed income securities in which you invest a set amount of money for a fixed amount of time. Both investments provide a fixed rate of return, so you know how much money you will receive as a return on your investment. As long as you keep your initial investment, or principal, in the investment for its entire term, then you receive your principal investment money back with interest at the end of the investment period. Early withdrawals from CDs have a penalty fee; bonds do not offer a early withdrawal option.
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Instructions
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CDs
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1
Choose a bank or investment firm. To help you decide, evaluate the terms of the CDs offered and the interest rate each pays on your money. If you want to be able to invest in bonds and CDs, open an account with a brokerage firm that has the ability to help you invest in both.
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2
Open a CD with a bank, or open a brokerage account with a brokerage firm to do so. Both types of CD accounts require filling out paperwork. Typically, you must supply your name, address, phone number, Social Security number and other basic information.
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3
Choose the CD. Let the banker or the financial adviser know which CD you want and how much you want to invest. CDs offer terms as short as six months or as long as 10 years. Keep in mind that your money is tied up in the CD for the term, so choose a term that fits into your overall financial plan and goals.
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4
Deposit your money into the CD.
Bonds
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5
Decide which types of bonds you want to invest in. Bonds are investments generally issued by governments---from the federal all the way down to the county level. Corporations can also issue bonds. Bonds are a way of collecting enough money to help cover the cost of specific projects.
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Find and contact a brokerage firm. Let the financial adviser know which bonds interest you. Alternatively, the financial adviser can help you choose the bonds that fit with your financial goals. The adviser will tell you if the firm has access to the bonds that interest you.
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Open a brokerage account, and deposit the cash you want to invest.
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