The basic steps to buy a bond on Fidelity

To buy a bond on Fidelity, log into your account, navigate to the Bonds section under Trading & Investing, search for the specific bond you want, review its details, and place your order just as you would for a stock. The entire process takes about five minutes once you know which bond you're after.

Fidelity lets you buy individual bonds directly — Treasury bonds, corporate bonds, municipal bonds, and agency bonds — without going through a mutual fund or ETF. You'll need a funded brokerage account (cash or margin), and you'll pay a transaction fee that varies by bond type, typically ranging from $1 to $10 per trade depending on whether it's a new issue or a secondary market purchase.

The key difference from stocks is that bonds trade over-the-counter, not on an exchange, so availability and pricing depend on what Fidelity's inventory has at that moment. If a specific bond isn't available, you may need to wait for it to come to market or choose a similar alternative.

Key Takeaways

  • Log into your Fidelity account, go to Trading & Investing, select Bonds, and search by bond name, ticker, or CUSIP number to find what you want to buy.
  • Review the bond's yield, maturity date, credit rating, and call features before placing your order, because these details determine your actual return and risk.
  • Fidelity charges transaction fees for bond purchases — typically $1 to $10 depending on bond type — which are deducted from your account at settlement.
  • Bonds settle in one to three business days, and your cash is held until settlement completes, so plan your account balance accordingly.
  • You can hold bonds to maturity or sell them before maturity through Fidelity's secondary market, though selling early means accepting whatever price the market offers at that time.

Finding and searching for bonds on Fidelity

Start by logging into your Fidelity account and clicking on Trading & Investing in the main menu. Select Bonds from the dropdown. You'll land on Fidelity's bond search page, which lets you filter by bond type (Treasury, corporate, municipal, agency), maturity date range, credit rating, and yield.

You can search by the bond's name, ticker symbol, or CUSIP number — a nine-character identifier unique to each bond. If you're looking for a specific Treasury bond, for example, you might search "10-year Treasury" or enter the CUSIP directly. Fidelity will show you available inventory with current bid and ask prices, yield to maturity, and the settlement date.

Pay attention to the bid-ask spread — the difference between what you'll pay (ask) and what you could sell it for immediately (bid). A wider spread means higher cost to buy and lower proceeds if you sell soon. New Treasury issues typically have tight spreads; older corporate bonds may have wider ones.

Understanding bond details before you buy

Before placing an order, review the bond's maturity date, coupon rate, yield to maturity, and credit rating. The maturity date tells you when you'll get your principal back. The coupon rate is the fixed interest payment you'll receive — for example, a 4% coupon on a $1,000 bond pays $40 per year, usually in two semi-annual installments.

Yield to maturity (YTM) is the total return you'll earn if you hold the bond until it matures, accounting for the price you pay today and all coupon payments. If you buy a bond at a discount (below par), your YTM will be higher than the coupon rate. If you buy at a premium (above par), your YTM will be lower. This is the number that matters for comparing bonds to other investments.

Check the credit rating from agencies like Moody's or S&P — higher ratings mean lower risk of default but typically lower yields. Also look for call features: some bonds can be redeemed by the issuer before maturity, which limits your upside if rates fall. Fidelity displays all this information on the bond detail page.

Placing your bond order on Fidelity

Once you've found a bond you want, click on it to open the order ticket. Enter the quantity you want to buy — bonds are typically sold in $1,000 increments, though some allow smaller purchases. Fidelity will show you the current ask price and calculate your total cost, including the transaction fee.

Choose your order type: most bond purchases are market orders, which execute at the current ask price immediately. You can also place a limit order if you want to buy only at a specific price or lower, though this means your order may not fill if the price doesn't reach your limit. For bonds, limit orders are less common because inventory is limited and prices move quickly.

Review the order summary, confirm your account has sufficient cash to settle, and submit. Fidelity will send you a confirmation email with the trade details, including the price paid, yield, maturity date, and settlement date — typically one to three business days out.

Transaction fees and costs you'll pay

Fidelity charges a transaction fee for most bond purchases. Treasury bonds typically cost $1 per trade. Corporate and agency bonds usually cost $5 to $10 per trade. Municipal bonds may have different pricing depending on whether they're new issues or secondary market trades. These fees are deducted from your account at settlement, not added to the bond price you see.

Beyond the transaction fee, you're also paying the bid-ask spread — the markup built into the price Fidelity quotes you. This isn't a separate line item; it's already reflected in the ask price. For a $10,000 bond purchase, the spread might represent $20 to $100 in additional cost depending on the bond's liquidity.

If you sell the bond before maturity, you'll pay another transaction fee at that time. Holding to maturity avoids the second fee and lets you avoid selling at an unfavorable price, which is why many individual bond buyers treat them as buy-and-hold investments.

What happens after your bond order settles

After settlement — typically one to three business days — the bond appears in your Fidelity account under Holdings. You'll see its current market value, your cost basis, unrealized gain or loss, and the next coupon payment date. Fidelity tracks all coupon payments and deposits them into your cash account automatically on the payment date.

Your bond's market value will fluctuate daily based on interest rate changes and credit conditions, but this doesn't matter if you plan to hold to maturity — you'll receive par value ($1,000 per bond) at maturity regardless of current market price. If you need to sell before maturity, you can list it for sale through Fidelity's secondary market, and you'll receive whatever price the market offers at that time.

Fidelity provides tools to track your bond holdings, including a maturity ladder view that shows when each bond matures, helping you plan for reinvestment or cash needs. You can also set up alerts for upcoming maturity dates or coupon payments.

Choosing between individual bonds and bond funds on Fidelity

Individual bonds work best if you have a specific time horizon and want predictable income — you know exactly when you'll get your money back and what you'll earn. They're also simpler for tax planning because you control when you sell and realize gains or losses.

Bond mutual funds and ETFs, by contrast, are easier to buy in small amounts, offer instant diversification across many bonds, and let you reinvest dividends automatically. They're better if you want ongoing income without managing individual bonds or if you don't have enough capital to build a diversified bond ladder. Fidelity offers both options, and many investors use a combination.

Individual bonds carry more risk if you need to sell before maturity — you're subject to whatever price the market offers that day. Bond funds smooth out this risk by holding many bonds, but they don't have a maturity date, so your principal value fluctuates with interest rates. Choose based on your time horizon and how much active management you want to do.

Frequently Asked Questions

Do I need a minimum account balance to buy bonds on Fidelity?

No minimum account balance is required, but you need enough cash to cover the bond purchase plus the transaction fee. Most bonds are sold in $1,000 increments, so you'll need at least $1,000 to $1,010 in available cash to buy one bond.

Can I buy bonds in a retirement account like an IRA?

Yes, you can buy individual bonds in any Fidelity account type — taxable brokerage, IRA, 401(k), or others — using the same process. Bonds in retirement accounts have the same tax advantages as other investments held there, meaning coupon income and capital gains aren't taxed until withdrawal.

What's the difference between buying a new bond and a secondary market bond?

New bonds are issued directly by the borrower and typically have tighter bid-ask spreads and lower transaction fees. Secondary market bonds are previously issued bonds being resold by other investors; they may have wider spreads and higher fees, but you have access to a much larger inventory of bonds with different maturities and rates.

Can I sell a bond before it matures?

Yes, you can sell any bond you own through Fidelity's secondary market. You'll receive the current market price, which may be higher or lower than what you paid depending on interest rate changes and the bond's credit quality. You'll pay another transaction fee when you sell.

What happens if a bond issuer defaults?

If the issuer defaults, you may lose some or all of your principal. This is why credit rating matters — higher-rated bonds have lower default risk. Treasury bonds carry no default risk because they're backed by the U.S. government. If you're concerned about default risk, stick to investment-grade bonds (rated BBB or higher) or Treasuries.