You can buy corporate bonds through a broker, directly from the issuer, or through a bond fund — each route has different minimums and costs
Most individual investors buy corporate bonds through a brokerage account, the same way they buy stocks. You log in, search for the bond by ticker or issuer name, and place an order. The broker handles settlement and holds the bond in your account. This is the most common path because brokers offer a wide selection, let you buy in smaller quantities than direct purchase, and handle the paperwork.
You can also buy directly from a company during a new bond offering, though this usually requires a larger initial investment and happens less frequently than stock offerings. Some companies sell bonds through their investor relations website or through a bank underwriting the offering. A third option is a bond fund or exchange-traded fund (ETF) that holds corporate bonds — you buy shares of the fund instead of individual bonds.
Key Takeaways
- Brokerages like Fidelity, Charles Schwab, and Vanguard let you search and buy individual corporate bonds with account minimums typically between $0 and $2,500.
- Direct purchase from an issuer usually requires a minimum investment of $1,000 to $5,000 and happens only when the company issues new bonds.
- Bond funds and ETFs spread your money across many bonds and charge annual fees, but require no minimum bond purchase amount.
- Brokerage bond prices include a markup that varies by broker and bond type, so comparing prices across platforms before buying can lower your cost.
- You need a brokerage or investment account open before you can buy; opening one takes 10 to 15 minutes online and requires basic personal and financial information.
Buying through a brokerage account
A brokerage account is the standard route for individual bond buyers. Major brokerages that offer corporate bonds include Fidelity, Charles Schwab, E*TRADE, Vanguard, and Interactive Brokers. Each maintains a searchable inventory of bonds available for sale, including corporate bonds issued by thousands of companies. You search by company name, ticker, or bond characteristics like maturity date and yield, then place a buy order just as you would for a stock.
Account minimums vary. Fidelity and Charles Schwab have no account minimum. Vanguard requires $3,000 to open a brokerage account. Some brokerages charge per-bond trading fees ($1 to $10 per bond) while others charge no commission but include a markup in the bond price itself. The markup is the difference between what the broker paid for the bond and what they sell it to you for — typically 0.5% to 2% of the bond's value, though it varies by bond liquidity and broker.
The advantage of a brokerage is selection and flexibility. You can buy a single bond or dozens, hold them to maturity or sell before maturity, and see real-time pricing. The disadvantage is that you need to understand bond pricing and yields yourself, and markups are not always transparent — you may not know exactly how much you are paying above the broker's cost.
Buying directly from the issuer
Some companies sell new bonds directly to investors without going through a broker. This typically happens when a corporation issues bonds for the first time or makes a new offering. You find out about these offerings through the company's investor relations website, a press release, or a prospectus filed with the Securities and Exchange Commission (SEC). The company or an underwriting bank handles the sale.
Direct purchase minimums are usually $1,000 to $5,000 per bond, and you may be required to hold the bond for a set period. The advantage is that you avoid brokerage markups and may get a slightly better price than buying on the secondary market later. The disadvantage is that these offerings are infrequent, you have limited selection, and you cannot sell the bond easily if you need the money before maturity — you would have to sell it through a broker at whatever the market price is at that time.
To find new corporate bond offerings, check the SEC's EDGAR database (sec.gov/edgar), which lists all public bond offerings, or visit a company's investor relations page directly. Some brokerages also notify account holders about new offerings in their inventory.
Buying through bond funds and ETFs
A bond fund or ETF pools money from many investors and uses it to buy a portfolio of bonds. You buy shares of the fund, not individual bonds. A corporate bond fund might hold 50 to 500 different corporate bonds, spreading your risk across many issuers and maturities. Examples include the Vanguard Intermediate-Term Corporate Bond ETF (VCIT) and the iShares Investment Grade Corporate Bond ETF (LQD).
The minimum investment is usually the price of one share, which ranges from $20 to $100 depending on the fund. You can buy and sell shares during market hours just like a stock. The fund charges an annual expense ratio — typically 0.04% to 0.20% for corporate bond ETFs — which is deducted from your returns automatically.
Bond funds are simpler if you do not want to research individual bonds or manage a portfolio yourself. They also offer daily liquidity — you can sell your shares any trading day. The trade-off is that you do not own the bonds directly, you cannot hold to maturity to avoid market price fluctuations, and you pay an ongoing fee even in years when the fund loses money.
Understanding bond pricing and markups
When you buy a corporate bond through a broker, the price you see includes a markup. The broker bought the bond at one price and is selling it to you at a higher price. This markup is how brokers make money on bond trades, since most corporate bond trades do not charge an explicit commission.
Markups vary widely. A highly liquid bond from a large company might have a markup of 0.25% to 0.5%. A less liquid bond from a smaller company might have a markup of 1% to 3%. The problem is that most brokerages do not show you the markup separately — you see only the final price. To estimate the markup, you can check the bond's price on multiple brokerages and compare, or look up the bond's last trade price on a financial data site like FINRA's Trade Reporting and Compliance Engine (TRACE).
This is why shopping around matters. A $10,000 bond with a 1% markup costs you $100 more than the same bond with a 0.5% markup. Over time, these differences add up, especially if you buy multiple bonds.
Opening an account and placing your first order
To buy corporate bonds, you need an investment account. Most brokerages let you open one online in 10 to 15 minutes. You will need your Social Security number, date of birth, address, employment information, and bank account details for funding. Some brokerages ask about your investment experience and goals to determine which account types you can access.
Once your account is open and funded, search for the bond you want to buy. Enter the company name or bond ticker into the broker's search tool. The system will show you available bonds from that issuer, along with the price, yield, maturity date, and rating. Read the bond's prospectus or fact sheet to understand the terms — interest rate, maturity date, call features, and any special conditions. Then place a buy order for the quantity you want.
Settlement typically takes one to three business days. During this time, the money is held in your account and the bond is transferred to you. Once settled, the bond appears in your account holdings and you begin receiving interest payments on the scheduled dates.
Comparing costs across different purchase routes
The total cost of buying a corporate bond depends on which route you choose and which broker or fund you use. Here is how they typically compare:
| Route | Minimum Investment | Costs | Best For |
|---|---|---|---|
| Brokerage account | $0–$3,000 account minimum; individual bonds often $1,000–$5,000 | Markup of 0.25%–3% per bond; some brokers charge $1–$10 per trade | Investors who want to pick specific bonds and hold to maturity |
| Direct from issuer | $1,000–$5,000 | No markup; may have holding period restrictions | New offerings when you want to avoid secondary market markups |
| Bond fund or ETF | $20–$100 per share | Annual expense ratio of 0.04%–0.20%; no per-trade fees | Investors who want diversification and do not want to manage individual bonds |
For a single $5,000 bond purchase through a brokerage, a 1% markup costs you $50. The same bond in a bond ETF with a 0.10% annual fee costs you $5 per year. If you hold the bond for five years, the ETF costs $25 total, while the brokerage markup is a one-time $50. However, if you buy multiple bonds or hold them longer, the brokerage route may be cheaper overall because you pay the markup only once per bond.
Frequently Asked Questions
Do I need a lot of money to start buying corporate bonds?
No. Bond funds and ETFs let you start with $20 to $100. Individual bonds through a broker typically require $1,000 to $5,000 per bond, but some brokers have no account minimum, so you can open an account and buy one bond at a time as you save. Direct purchase from an issuer usually requires $1,000 to $5,000 minimum.
What is the difference between buying a bond and buying a bond fund?
When you buy an individual bond, you own that specific bond and receive its interest payments until maturity or you sell it. When you buy a bond fund, you own a share of a portfolio of many bonds, and the fund manager handles buying and selling. Individual bonds let you control exactly what you own; funds offer diversification and are simpler to manage.
Can I sell a corporate bond before it matures?
Yes, through a broker on the secondary market. The price you get depends on interest rates and the bond's credit quality at the time of sale — you may get more or less than you paid. Bond funds can be sold any trading day at the current share price. Bonds bought directly from an issuer may have restrictions on early sale.
How do I know if a bond is safe to buy?
Check the bond's credit rating from agencies like Moody's, S&P, or Fitch. Ratings range from AAA (safest) to D (in default). Read the prospectus to understand what the company does, how much debt it already has, and any special terms of the bond. The broker's website usually displays the rating and key terms when you search for the bond.
What happens if the company goes bankrupt after I buy the bond?
Bondholders are paid before stockholders in bankruptcy, but you may not recover the full amount you invested. The company's assets are divided among creditors in order of priority. This is why credit rating and diversification matter — spreading your money across multiple bonds from different companies reduces the risk that one bankruptcy wipes out your investment.