Bond Commission

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Chapter 16 — Bond Commission
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Bond Commission

Bonds are sold “over the counter.” This means that they are bought through dealers or brokers, and there are always fees associated with using those dealers. Bonds are typically bought in bunches and the commission is often for the entire group. In other words, you pay the same commission whether you buy 1 bond or 100 bonds. It is therefore far more efficient to buy in bulk. For example, if you wanted to buy 10 different bonds in bunches of 10 instead of 100 bonds of the same type, then you would have to pay 10 separate commissions.

Of course, commissions and fee structures vary by brokerage, but it is important to be aware of the full costs of investing before entering into any investment strategy, including bonds. Most high commission brokerages would have you believe that they offer more thorough advice and information, but the internet and social media make it possible to find extensive trading advice online.

Quiz

What is the best strategy to approach bond commissions?

Correct
Incorrect
0/76 (0%) Correct
  • 1
    Don't invest in bonds. Stocks have higher returns anyway
  • 2
    Invest online because online brokers always have the lowest fees.
  • 3
    Call banks directly to arrange bond purchases.
  • 4
    Fully research investment options, including applicable fees, and decide the best strategy for your individual situation.
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