How to Invest in Bonds in Australia

Investors may seek diversification in the Australian market.

Bonds offer defined returns over a specified period of time resulting in less fluctuation than many stocks. The fact that bonds are debt instruments means investors are able to recoup money ahead of stock owners in the event that the issuer files for bankruptcy. Investors may seek international bonds in countries, such as Australia, with stable economic and political climates to increase returns or diversify a portfolio. With bonds, it is important to look at the credit rating of the issuer to truly define the risk. You must have a global trading account to purchase Australian bonds.

Things You'll Need

• Brokerage statement (if applicable)
• Internet connection

Instructions

1. Contact your brokerage account customer service representative and ask whether they offer global trading services with Australian securities. If they don't, find a brokerage firm that allows Australian securities purchases. Ask tax advisers, bank representatives and insurance agents for referrals or go online to find information on firms that do global trading. Scottrade, e*Trade and Schwab offer international trading services.

2. Open the account and fund it with a deposit or transfer of assets from another brokerage account.

3. Research the Australian bonds you are interested in buying. While brokerage firms may offer global transactions, you may find it difficult to get a lot of advice from U.S. brokerage advisers. Use Bloomberg, Yahoo Finance and MSN Money for current information on Australian bonds.

4. Buy the bonds. You may call the customer service number for the brokerage firm to place the order or log into your online account and follow the on-screen prompts.

5. Record any information about the transaction, including the bond name, interest rate and transaction fees, along with any confirmation number given to you by the representative.

Tips & Warnings

• Kangaroo or matilda bonds are foreign bonds sold in the Australian market. Check to see if the bonds you are purchasing are actual Australian bonds or U.S. bonds sold in Australia.

• Treat the interest earned on the bond as if it were a U.S. bond. Consider exchange rates when calculating earnings.

References

• Kiplinger: Want to Buy Foreign Bonds Directly?
• RPIFS: Taxation of Foreign Bonds
• Investopedia

Resources

• Bloomberg: Australia Government Bonds
• Yahoo FInance
• MSN Money
• e*Trade: Global Trading
• Charles Schwab: Global Trading