You can buy corporate bonds through a broker, directly from the issuer, or through bond funds — each route has different minimums and costs
Corporate bonds are sold in three main ways: through a brokerage account (the most common route for individual investors), directly from the company issuing the bond, and through mutual funds or exchange-traded funds that hold bonds. Most individual investors use a broker because it requires no minimum purchase amount, though some brokers charge transaction fees. Direct purchase from a company usually requires a larger initial investment — often $1,000 to $5,000 — but may have lower fees. Bond funds let you own a small piece of many bonds with as little as $50 to $100, though you pay ongoing management fees.
Key Takeaways
- Brokerages like Fidelity, Charles Schwab, and E*TRADE let you buy individual corporate bonds with no minimum, though some charge per-bond transaction fees ranging from $0 to $25.
- Direct purchase from a company's investor relations department usually requires $1,000 to $5,000 upfront and works best if you plan to hold the bond to maturity.
- Bond mutual funds and ETFs spread your money across many bonds and cost between 0.05% and 1% per year in management fees, depending on the fund.
- The secondary bond market (buying bonds already issued) is where most individual transactions happen, and prices fluctuate based on interest rates and the company's credit rating.
- You need a brokerage account to buy bonds on the secondary market, which takes 10 to 15 minutes to open online.
Buying through a brokerage account
A brokerage account is the standard way individual investors buy corporate bonds. You open an account online with a firm like Fidelity, Charles Schwab, E*TRADE, or TD Ameritrade, fund it with cash, and then search for and purchase bonds through the platform. The account setup takes 10 to 15 minutes and requires your Social Security number, address, and employment information.
Transaction costs vary by broker. Some charge $0 per bond trade (Fidelity and Charles Schwab offer this on many corporate bonds), while others charge $1 to $25 per bond. A few brokers charge a percentage of the trade value instead. Before opening an account, check the broker's bond trading page to see their current fee structure — it changes periodically and differs between new-issue bonds and secondary market bonds.
The bonds you buy through a broker are typically on the secondary market, meaning they were issued months or years ago and are now being resold. Prices fluctuate based on interest rates and the issuer's credit rating. If you buy a bond and then want to sell it before maturity, you'll face the same market price risk — the bond may be worth more or less than you paid.
Buying directly from the issuer
Some companies let investors buy their bonds directly without going through a broker. You contact the company's investor relations department, request information about their bond offerings, and complete the purchase through them. This route eliminates broker fees but usually requires a larger initial investment — typically $1,000 to $5,000 per bond, sometimes higher.
Direct purchase works best if you plan to hold the bond until it matures and collect all the interest payments. If you need to sell before maturity, you'll have to go through a broker anyway, which means paying a transaction fee to sell. Some companies also limit how many bonds you can buy directly or require you to be an existing shareholder. Call the investor relations number on the company's website to ask about their direct purchase program and current offerings.
Bond mutual funds and ETFs
A bond fund pools money from many investors and buys a portfolio of bonds — often dozens or hundreds. You buy shares of the fund rather than individual bonds. This approach lets you start with a small amount of money (often $50 to $100 for an ETF, $1,000 to $3,000 for a mutual fund) and own a piece of many different bonds at once.
The trade-off is cost and control. Bond funds charge annual management fees ranging from 0.05% to 1% or more, depending on the fund type and manager. You also don't know exactly which bonds you own — the fund manager decides that. If you want to sell, you sell your fund shares at the market price that day, which can be higher or lower than what you paid. Bond ETFs (exchange-traded funds) typically have lower fees than mutual funds and trade like stocks during market hours.
Bond funds are useful if you want diversification without researching individual bonds, or if you have a small amount to invest. They're also the easiest way to own bonds if you're new to investing.
Understanding bond pricing and the secondary market
Most corporate bonds trade on the secondary market — a network of dealers and brokers who buy and sell already-issued bonds. When you buy through a broker, you're almost always buying from this secondary market, not from the company itself. Prices on the secondary market move based on interest rates, the company's financial health, and how much time is left until the bond matures.
If interest rates rise after you buy a bond, the bond's price falls (because new bonds will pay higher interest). If the company's credit rating drops, the price falls too (because investors see it as riskier). The opposite happens if rates fall or the company's rating improves. This price movement matters only if you sell before maturity. If you hold the bond to maturity, you get back the full face value regardless of what happened to the price in between.
Comparing costs across purchase methods
| Purchase Method | Minimum Investment | Typical Costs | Best For |
|---|---|---|---|
| Brokerage (secondary market) | No minimum | $0–$25 per bond, or percentage-based | Investors who want to pick specific bonds and may sell before maturity |
| Direct from issuer | $1,000–$5,000 | No transaction fee; may have account fees | Investors planning to hold to maturity with larger amounts |
| Bond mutual fund | $1,000–$3,000 | 0.1%–1%+ annual management fee | Beginners or investors wanting instant diversification |
| Bond ETF | Price of one share (often $50–$100) | 0.05%–0.5% annual management fee | Investors wanting low-cost diversification with flexibility |
What to check before you buy
Before purchasing a corporate bond, look up the company's credit rating through Moody's, Standard & Poor's, or Fitch. The rating tells you how likely the company is to pay back the bond. Bonds rated BBB or higher are considered investment-grade (lower risk); anything below that is considered high-yield or "junk" (higher risk and higher interest rate to compensate).
Also check the bond's yield-to-maturity (YTM), which shows the total return you'll get if you hold the bond until it matures. Compare this to the current interest rate environment — if rates are rising, new bonds will offer higher yields, so older bonds with lower yields may be a poor choice. Finally, confirm the maturity date and whether the bond is callable (meaning the company can pay it off early if interest rates fall).
Frequently Asked Questions
Do I need a lot of money to start buying corporate bonds?
No. Through a broker, you can buy a single bond with no minimum amount — you just pay the purchase price of that bond plus any transaction fee. Bond ETFs let you start with $50 to $100. Direct purchase from a company usually requires $1,000 to $5,000. A bond mutual fund typically requires $1,000 to $3,000 upfront.
Can I sell a corporate bond before it matures?
Yes, through a broker on the secondary market. The price you get depends on current interest rates and the company's credit rating at the time you sell — you may get more or less than you paid. If you sell at a loss, you can deduct that loss on your taxes. Selling before maturity also means paying a transaction fee to your broker.
What's the difference between a new-issue bond and a secondary market bond?
A new-issue bond is sold directly by the company when it first comes to market. A secondary market bond was issued earlier and is now being resold by another investor. Secondary market bonds usually have lower prices because they've already been trading and may have different terms than new issues. Most individual investors buy secondary market bonds through brokers.
Are bond ETFs or bond mutual funds better for beginners?
Bond ETFs are usually better for beginners because they have lower fees (often 0.05% to 0.3% annually), trade like stocks so you can buy one share at a time, and offer more transparency about holdings. Bond mutual funds require a larger upfront investment and have higher fees, though some offer more active management if you want that.
What happens if the company goes bankrupt?
Bondholders are paid before stockholders in a bankruptcy, but you may not recover the full amount you invested. The company's remaining assets are divided among creditors in a specific order. Investment-grade bonds (rated BBB or higher) have lower bankruptcy risk. High-yield bonds carry higher bankruptcy risk, which is why they pay higher interest rates.