Buy Bonds Online
Online trading for bonds isn’t in the same league as online stock trading, but a few brokerage firms offer true electronic bond trading.
When a corporation or government borrows money, it issues bonds [Hack #80] , which are nothing more than promissory notes. The organization that issues bonds pays interest to the people who loan them money—the investors who purchase the bonds. After a period of time, the organization pays the money it borrowed back to the bondholders. Many investors purchase bonds to receive a steady stream of income. However, bonds can also provide capital gains when interest rates fall. Sad to say, online bond trading hasn’t kept pace with its electronic stock trading counterpart. Many online brokers act as if they offer online bond trading, but the service might be no more than a glorified messenger service, in which the online trade forwards the order information to a human broker who fills the order the old-fashioned way. Other brokers provide online research but resort to phone calls for orders. However, a few brokers are starting to offer automated bond trading for individual investors. The services are fairly limited and fees can be high, so review your options carefully before you become an online bond trading pioneer.
Although many brokerage companies are beefing up their electronic bond trading systems, the beneficiaries of these enhancements are often professional traders. However, plans are in the works to build electronic trading ...
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