Bonds are an investment opportunity that is great for those who want steady returns and don’t mind taking on more risk than they might with stocks. Here are six steps to trading bonds online.
Open a brokerage account
You must first open up a brokerage account with any brokers offering online bond trading to trade bonds. It is crucial to make sure they offer all suitable types of bonds you desire to trade (i.e. corporate, treasuries, etc.). If it is your first time opening up a brokerage account, be sure to enter all requested information correctly, as incorrect information can result in longer wait times until you can withdraw funds.
Open a bond trading account
Once your brokerage account has been opened, you must then request to open a separate account that will allow you to trade bonds. This is usually just another section on the main page of your brokerage account, but if it isn’t, then go to the ‘markets’ tab followed by ‘advanced trading’, and there should be an option for opening up a new bond trading account. Make sure this step is completed; otherwise, you won’t be able to trade!
Do your research before purchasing any bonds
Once your accounts are set up, make sure you do all necessary research before buying any bonds. To get started with researching specific types of bonds, check out places like Google Finance and Morningstar. For those new to bonds, it might be a good idea to consider starting with corporate bonds as they offer the best return on investment (ROI).
Determine your risk tolerance
Before purchasing any bonds, make sure you first determine what your risk tolerance is. Bonds may be an attractive investment opportunity, but they come at more risk than other options like stocks and real estate investments. Suppose you purchase a bond and hold onto it for too long (holding period). In that case, there is usually no way to get back all the money you invested into that bond or even generate much of a profit from it compared to other types of investments.
Decide on how many bonds you want to buy
Once your risk tolerance has been determined and you have done all necessary research on specific types of bonds, it is time to decide how many bonds you wish to purchase. It is recommended that new investors only purchase a small amount per bond until they feel more comfortable taking higher levels of risk with their investments.
Buy the selected bonds
The final step is to purchase any specific type of bond (remembering that you must first open up a trading account for this). Simply go to the ‘trading’ section of your brokerage account and find an option for buying or selling bonds (usually found under stock trading if it isn’t under other options). If applicable, choose the number of bonds and the specific ones you wish to buy and then hit submit. Now, wait until your order is filled and the money invested in bonds shows up in your account.
How Singaporeans can trade bonds online
In the past, trading bonds was a complicated process requiring you to work with a broker or go through a bank. Today, however, you can trade bonds from anywhere in the world by using an online brokerage platform.
The first step is to choose a broker who has Singaporean citizenship. The next step is choosing your bond; there are several types of bonds available, each offering different rates of return depending on your investment needs (risk tolerance).
You do not have to be physically present in Singapore when opening up an online brokerage account; it’s enough if at least one of your accounts opened by the broker has a Singaporean address. New investors can use online demo accounts offered by Saxo capital markets pte before investing their own money. When you have a brokerage account, you will be able to start trading your bond online from anywhere in the world – safely and securely.