How to Get Bonds | Buy Safely Without Overpaying

You can buy bonds through TreasuryDirect, a brokerage account, or a bond fund, after picking the issuer, term, price, and cash-out plan.

Bonds sound simple: you lend money, you get interest, you get your principal back at the end. The tricky part is the “how” in real life. Where you buy. What price you pay. What happens if you sell early. What fees sneak in. This article walks you through those details so you can place an order with your eyes open.

You’ll see three main routes to own bonds, plus a quick way to screen a bond before you buy it. You’ll also get two tables you can save for later, one to pick the right buying route, one to run a last-minute check before you click “submit.”

What a bond is and what you’re buying

A bond is a debt security. When you buy one, you’re lending money to an issuer such as a government, a city, or a company. In return, the issuer promises interest payments and repayment of principal at maturity. That’s the plain-English version of how bonds work. Investor.gov’s bond overview uses the same “IOU” idea and is a clean reference if you want the official wording.

Bonds come with a few moving parts. If you know these, you’ll read bond listings and account screens with less friction.

Bond terms you’ll see on every listing

• Maturity: the date your principal is due back.
• Coupon: the stated interest rate on the bond.
• Price: what you pay today. It can be above or below face value.
• Yield: the return implied by today’s price and the bond’s cash flows.
• Call feature: a clause that can let the issuer redeem early.

Why price matters more than the coupon

Two bonds can share the same coupon and still be a different deal, because price drives yield. If you buy a bond at a premium, your yield drops. If you buy at a discount, your yield rises. This is also why bonds can lose value on paper when rates rise. Your coupon did not change, but new bonds may pay more, so your older bond can trade for less.

Where bonds come from and where you can buy them

Most individual buyers get bonds in one of three ways:

1. Direct from the U.S. Treasury through TreasuryDirect.
2. Through a brokerage, either new issues or the secondary market.
3. Through a fund (bond mutual fund or ETF) inside a brokerage account.

Each route fits a different kind of buyer. TreasuryDirect is the clean lane for U.S. Treasury securities you plan to hold. A brokerage gives you selection and easier trading. Funds offer instant diversification, at the cost of giving up a set maturity date and adding fund fees.

U.S. Treasury securities: direct access and simple credit story

TreasuryDirect is the U.S. government’s platform for buying and holding Treasurys and savings bonds. The site explains that, with an account, you can buy marketable Treasury securities and hold them electronically. TreasuryDirect’s “Buying a Treasury Marketable Security” page lays out the account requirement and basic buying setup.

If you want a long maturity, Treasury bonds are commonly issued with 20- or 30-year terms, and they pay interest every six months. TreasuryDirect spells out those basics on its product pages. TreasuryDirect’s Treasury Bonds overview is a handy spot to confirm terms and payment timing.

Corporate and municipal bonds: wider choice, more homework

Corporate bonds can pay more than Treasurys, but you’re taking issuer credit risk. Municipal bonds add another layer: tax rules and issuer details. If you’re new to non-Treasury bonds, read a neutral primer from a regulator-style source first. FINRA’s investor education pages explain how bonds work and flag trade-offs like maturity, pricing, and credit characteristics. FINRA’s bond overview is a solid starting point.

For municipal bonds in particular, the MSRB’s educational material is worth reading because it focuses on how individual buyers actually transact. MSRB’s “Buying and Selling Municipal Bonds” page explains common buying paths and what ownership can look like.

How to get bonds for beginners without nasty surprises

Before you buy anything, decide what “success” means for you. A bond purchase can be built for cash flow, for parking money for a date on the calendar, or for smoothing stock swings in a mixed portfolio. The bond that fits a planned purchase next year can be a poor fit for money you might need next week.

Pick a time window you can live with

If you might need the money early, treat that as a design constraint. Selling before maturity can mean selling at a loss, even when the issuer is still paying as promised. If you want a set date for principal back, individual bonds and Treasury securities can line up well. Funds don’t mature on a set date; you can sell shares any day the market is open, at the current share price.

Decide how much homework you want to do

Individual corporate and municipal bonds reward homework: issuer strength, call features, trade pricing, and liquidity. Funds hand most of that work to a manager and spread risk across many bonds, but you take the fund’s fee drag and you accept that the share price can move day to day.

Know the two big ways you can lose money

• Rate moves: when market rates rise, older bonds can trade down.
• Issuer trouble: missed payments or default can hit corporate and municipal bonds.

Those two risks show up in different degrees across issuers and maturities. That’s why your buying route matters as much as the bond type.

Table 1: Bond types, where to buy, and what to watch

Bond or bond-like holding	Where individuals usually buy	What to watch before buying
U.S. Treasury bills (short-term)	TreasuryDirect or brokerage	Purchase date vs. maturity date, reinvest settings, cash needs before maturity
U.S. Treasury notes (mid-term)	TreasuryDirect or brokerage	Rate sensitivity if you may sell early, auction vs. secondary pricing
U.S. Treasury bonds (long-term)	TreasuryDirect or brokerage	Longer duration swings, plan for holding through rate cycles
TIPS (inflation-linked Treasurys)	TreasuryDirect or brokerage	How inflation adjustments affect payouts and prices, holding period plans
U.S. savings bonds (EE or I)	TreasuryDirect	Holding rules and access limits, redemption timing, tax rules
Investment-grade corporate bonds	Brokerage (new issue or secondary)	Issuer strength, call features, bid-ask spread, trade markup/markdown
Municipal bonds (general obligation or revenue)	Brokerage	Tax status, call features, disclosure, liquidity, minimum trade sizes
Bond ETF or mutual fund	Brokerage	Expense ratio, maturity profile, credit profile, price swings vs. a fixed maturity date

Getting bonds online through TreasuryDirect and auctions

If you want U.S. Treasury securities and you plan to hold, TreasuryDirect can be a clean setup. The buying flow is not fancy, but it is direct: open an account, link a bank, pick the security, schedule a purchase, then hold the security in the account. TreasuryDirect explains the basic requirement and registration choices on its how-to pages for marketable securities.

Step-by-step: a first TreasuryDirect purchase

1. Open the account in your legal name and complete identity checks.
2. Link your bank so payments can be pulled on purchase dates and sent back at maturity.
3. Select the security type (bill, note, bond, TIPS, or savings bond).
4. Choose a purchase amount and pick the auction date if you’re buying a new issue.
5. Confirm how interest is paid and where maturity proceeds go.
6. Save your confirmations so you can track purchases and dates.

One practical tip: treat your login and account recovery as part of the setup. If you’ll hold for years, you want the account to be easy to access when you need it.

Auctions vs. buying on the market

When you buy a new Treasury issue at auction, you don’t haggle over price. You place a noncompetitive order and accept the yield set at auction. When you buy a Treasury on the secondary market through a brokerage, the price is whatever the market is offering at that moment. For many buyers, auctions feel simpler because you’re not comparing markups and spreads on a trade ticket.

How to get bonds through a brokerage account

A brokerage account is the flexible route. You can buy Treasurys, corporates, munis, and funds in one place. You can also sell bonds before maturity, which can be handy when your plan changes. That same flexibility means you need to pay closer attention to trade details.

Two ways brokerages sell bonds

• New issues: bonds sold to the public when they’re first issued.
• Secondary market: bonds that are already outstanding and are being resold.

On many platforms, the listing will show coupon, maturity, price, yield, and whether the bond is callable. Your job is to decide whether the yield is fair after costs and whether the bond fits your cash-out plan.

Trade costs that don’t feel obvious on screen

Bond trading costs don’t always look like a stock commission. They can show up as a markup or markdown built into the price you’re shown, plus the bid-ask spread. Some platforms disclose the markup on confirmations rather than on the order ticket. FINRA’s investor materials explain that bond prices and yields connect, and that trading can involve costs beyond a simple commission. That’s why it pays to compare listings across more than one dealer quote when you can.

What to check on a corporate or municipal bond listing

• Call date and call price: you may get your principal back early, which can cap your upside.
• Credit ratings when available: a starting point, not the whole story.
• Minimum trade size: some munis can be chunky for small accounts.
• Current yield vs. yield to maturity: the second one ties to your holding plan.
• Liquidity: thinly traded bonds can be harder to sell at a fair price.

Buying bond funds when you want diversification in one click

If you want broad exposure without picking individual CUSIPs, bond funds are the simplest lane. You buy shares, the fund owns many bonds, and your share price moves with the market value of the fund’s holdings. That gives you diversification fast. It also means you don’t control the maturity date of the underlying bonds.

Bond funds can lose money. That can surprise new buyers who think “bond” always equals steady value. Investor.gov explains that bond funds carry risks like interest rate risk and credit risk, just like individual bonds do, and that share prices can drop. That’s a healthy mental model before you buy your first bond ETF.

When funds can fit better than individual bonds

• You’re investing smaller amounts and want wide diversification.
• You don’t want to research individual issuers.
• You want easy rebalancing inside a portfolio.

What to read before buying a fund

Look at the fund’s maturity profile, credit mix, and expense ratio. If the fund holds longer-term bonds, it can swing more when rates move. If it holds lower-rated bonds, it can swing more when credit conditions tighten. The prospectus and fact sheet usually lay this out in plain tables.

Table 2: Last-minute checklist before you buy

What to check	What you want to see	What can go wrong
Your cash-out plan	You can hold to maturity or accept price swings	Selling early during a rate spike locks in a loss
Yield measure	Yield to maturity aligns with your holding plan	Chasing coupon while ignoring price leads to a weak deal
Call terms	Non-callable, or call terms you accept	Issuer calls the bond when it’s good for them, not you
Trade costs	Clear markup/markdown or low spread	You overpay and the bond starts “underwater” on day one
Issuer strength	Credit quality fits your comfort level	Downgrades or default hit price and payouts
Position size	No single issuer dominates your holdings	One bad issuer does outsized damage
Account location	Tax handling matches the bond type you bought	After-tax return disappoints due to a mismatch

Common mistakes that cost bond buyers money

Most bond mistakes aren’t dramatic. They’re small misreads that add up. Here are the ones that show up the most.

Buying long maturity when you need flexibility

Longer maturities tend to move more when rates move. If you might need the money, keep that front and center. A bond that fits a “hold for decades” plan can be a headache in a “might sell next year” plan.

Ignoring call features

Callable bonds can pay a higher yield up front, but the issuer can redeem early. When rates fall, issuers are more likely to call and refinance, which can push you to reinvest at lower yields.

Confusing “safe issuer” with “safe price”

Even when the issuer is rock solid, the market price of the bond can move. If you hold to maturity, price moves can matter less. If you plan to sell, price moves can define your outcome.

Overpaying on a thinly traded bond

Some bonds trade in small, infrequent clips. That can widen spreads and make “fair price” harder to judge. If you see a wide gap between the price you can buy at and the price you can sell at, that’s the market telling you liquidity is limited.

A simple way to build your first bond plan

If you want a clean starting point, use this structure and adjust from there:

1. Pick one route (TreasuryDirect, brokerage, or fund) based on how much control you want.
2. Set a maturity ladder if you’re buying individual bonds, spaced across dates you care about.
3. Keep position sizes modest on your first few trades until you’re comfortable reading trade tickets.
4. Write down your sell rule: “Hold to maturity unless X happens.”
5. Review your confirmations and track your dates and payouts.

That’s enough to get started without turning bond buying into a second job. As you gain comfort, you can widen the menu to corporates, munis, and different maturities.

Picking the right place to buy based on your next move

Use TreasuryDirect when you want direct U.S. Treasury exposure and you’re fine holding in that system. Use a brokerage when you want selection, easier selling, and one dashboard for multiple bond types. Use funds when you want diversification with minimal research and you accept that the share price moves.

If you take one thing from this page, take this: the bond itself is only half the deal. The buying route shapes your costs, your flexibility, and how easy it is to stick to your plan.