Buying individual bonds
The first option is buying individual bonds. Bonds can be bought with most internet brokers, where you pay a transaction fee that can be compared to the fee paid when buying stocks. It’s important that you keep an eye on the duration, actual price, nominal value and the interest of the bond you want to buy.
Sometimes it’s possible to subscribe to an emission. You’ll receive bonds for the issue price, which could be very interesting when bonds are being issued under the nominal value.
Trading bonds through an investment fund
It’s also possible to trade bonds through an investment fund. Within the investment fund there are numerous possibilities. You can determine in which region, currency, liquidity, duration and forms you want to trade.
There is something for every trader. With an investment fund you don’t buy any individual bonds, but instead you buy participation in the fund.
Which option is the best?
This completely depends on your personal preference. If you buy and select bonds yourself, you can determine the criteria. Besides that it’s also cheaper to buy individual bonds than to buy participation in an investment fund because an investment fund charges management fees.
An investment fund can be an interesting option though. Normally bonds costs about 1000 pounds (minimum) and with an investment fund you can participate for as little as a few pounds. Besides that, you don’t have to worry about making any decisions when you’re investing with an investment fund. You’ll also save a lot of time, which is worth something too of course.