You can buy corporate bonds through a brokerage account, directly from some companies, or through bond funds

Corporate bonds are sold in three main ways: through a brokerage firm (the most common route), directly from the company or its agent, and as part of a mutual fund or exchange-traded fund. Which route makes sense depends on how much you want to invest, whether you want to pick individual bonds or let someone else manage them, and what fees you are willing to pay. Most individual investors start with a brokerage account because it offers the widest selection and the lowest barrier to entry.

The bond market itself is not a single place like the stock exchange. Bonds trade over-the-counter, meaning a dealer buys from one party and sells to another, and the price you see includes the dealer's markup. This is why the same bond can cost different amounts at different brokerages — each firm negotiates its own prices with bond dealers. Understanding where bonds come from and how they move between buyers helps you understand why costs vary and what you are actually paying for.

Key Takeaways

  • A brokerage account at firms like Fidelity, Charles Schwab, or Vanguard lets you buy individual corporate bonds, bond funds, and bond ETFs all in one place.
  • Individual bonds typically require a minimum purchase of $1,000 to $5,000 per bond, while bond funds and ETFs let you invest smaller amounts.
  • Bond funds and ETFs charge annual fees (called expense ratios) that range from under 0.1% to over 1%, while individual bonds have no ongoing fees once you own them.
  • Some large corporations sell bonds directly to investors through their websites or transfer agents, but this route is less common and usually requires larger minimums.
  • The price you pay for a bond includes the dealer's markup, which is why comparing prices across brokerages before you buy matters.

Buying individual bonds through a brokerage account

Opening a brokerage account is the standard way to buy corporate bonds. You fund the account with cash, then search the firm's bond inventory and place an order. Major brokerages like Fidelity, Charles Schwab, E*TRADE, and Vanguard all offer corporate bond trading. The process is similar to buying stocks: you log in, search by company name or bond identifier, see the current price and yield, and buy if the terms match what you want.

Most brokerages require a minimum purchase of $1,000 to $5,000 per individual bond, though some allow smaller amounts. The price you see includes the dealer's markup — typically 1% to 2% for corporate bonds, though it can be higher or lower depending on the bond's age, how actively it trades, and current market conditions. You will not see the markup listed separately; it is built into the price. Once you own the bond, you hold it until maturity (when the company repays you) or sell it before maturity if you need the cash.

The advantage of individual bonds is that you know exactly when your money comes back and how much interest you will receive each year. The disadvantage is that you need enough cash to meet the minimum purchase, you are betting on that one company's ability to repay, and selling before maturity means you are subject to whatever price the market offers at that moment. If interest rates have risen since you bought, your bond will be worth less if you try to sell it early.

Bond funds and exchange-traded funds (ETFs)

A bond fund is a pool of money managed by a professional who buys and sells many bonds on your behalf. You buy shares of the fund, and the fund holds dozens or hundreds of individual bonds. An exchange-traded fund (ETF) works the same way but trades like a stock — you can buy and sell shares throughout the day at market prices. Both let you invest small amounts (often $50 to $500 to start) and spread your money across many bonds instead of betting on one company.

The trade-off is cost and control. Bond funds and ETFs charge an annual fee called an expense ratio, which is a percentage of the money you have invested. A fund tracking the broad corporate bond market might charge 0.05% to 0.2% per year, while an actively managed fund (where a manager picks bonds) might charge 0.5% to 1% or more. Over time, these fees add up. If you hold an individual bond to maturity, you pay nothing after you buy it; if you hold a fund for 20 years, you pay that annual fee every single year.

Bond funds and ETFs also do not have a maturity date. The fund manager constantly buys and sells bonds, so the value of your shares goes up and down with interest rates and the credit quality of the bonds in the fund. This means you could lose money in a bond fund even if the underlying bonds do not default — if you sell when interest rates have risen, your shares will be worth less than you paid. For investors who want simplicity and diversification, this is often worth the cost; for investors who want predictability, individual bonds are clearer.

Direct purchase from companies and transfer agents

Some large corporations allow investors to buy bonds directly without going through a broker. The company or its transfer agent (a firm hired to manage shareholder and bondholder records) handles the transaction. This route cuts out the middleman and can lower costs, but it is less common and usually requires larger minimum purchases — often $5,000 to $25,000 per bond.

To learn about a company offers direct purchase, visit its investor relations website and look for a section on bonds or debt securities. Not all companies do this, and the ones that do usually only offer it for new bond issues (when they first sell the bonds to the public), not for bonds already trading on the secondary market. If you want to buy an existing bond from another investor, you will need to use a brokerage account.

Comparing costs across brokerages

The same corporate bond can have different prices at different brokerages because each firm negotiates its own prices with bond dealers. Before you buy, check the price and yield at two or three brokerages if you can. The difference might be small (a few dollars on a $5,000 bond), but it adds up if you are buying multiple bonds.

Some brokerages also charge transaction fees for buying or selling bonds — typically $5 to $25 per trade — while others do not. Fidelity, Charles Schwab, and Vanguard generally offer no transaction fees for corporate bonds, but confirm this before you open an account. If you are buying a small number of bonds, a $10 fee per trade is a bigger percentage of your investment than if you are buying many bonds at once.

Understanding what you are actually paying

When you buy a corporate bond through a brokerage, the price you see is the ask price — what the dealer is asking you to pay. This price includes the dealer's markup. You will not see a separate line item for this markup; it is already built in. The markup compensates the dealer for finding the bond, holding it in inventory, and taking on the risk that the price might move before they sell it.

For actively traded bonds (ones that change hands frequently), the markup is usually smaller because dealers can move them quickly. For older or less popular bonds, the markup can be larger. This is why a bond issued by a large, well-known company might have a smaller markup than a bond from a smaller or less-known company. If you are buying a bond that does not trade often, ask your broker what the markup is — they should be able to tell you, even if it is not shown on the screen.

Frequently Asked Questions

Can I buy corporate bonds with a small amount of money?

Individual bonds typically require $1,000 to $5,000 per bond, which is a barrier for small investors. Bond funds and ETFs let you start with $50 to $500. If you have less than $5,000 to invest, a bond fund or ETF is usually the better choice.

What is the difference between a bond fund and a bond ETF?

Both hold many bonds and charge annual fees. The main difference is that an ETF trades like a stock during market hours, so you can buy and sell at any time. A mutual fund is priced once per day after the market closes. ETFs often have lower fees, but both are good options depending on how often you think you will need to buy or sell.

Should I buy individual bonds or a bond fund?

Individual bonds are better if you want to know exactly when your money comes back and how much interest you will earn. Bond funds are better if you want diversification, lower minimums, and do not want to manage multiple bonds. Many investors use both — individual bonds for core holdings and a bond fund for diversification.

Why is the price different at different brokerages?

Each brokerage negotiates its own prices with bond dealers, and each dealer includes its own markup. The markup covers the dealer's costs and profit. Comparing prices at two or three brokerages before you buy can save you money, especially on larger purchases.

Do I have to hold a corporate bond until maturity?

No. You can sell a bond before maturity through your brokerage account. However, if interest rates have risen since you bought it, the bond will be worth less, and you will lose money. If interest rates have fallen, it will be worth more. This is why individual bonds are most predictable if you plan to hold them to maturity.