How to Buy Investment Grade Bonds
- 1). Determine how much of your overall portfolio you want to dedicate to investment grade bonds. If you are young, with decades to go before retirement, you might want to keep more money in the stock market. But as retirement gets closer, it may make sense to put more money in investment grade bonds.
- 2). Consider using a quality bond mutual fund rather than purchasing individual bonds. Unless you have a great deal of money to invest, it is generally better to use bond funds.
- 3). Contact several large, low-cost mutual fund families and inquire about the bond funds they offer. Vanguard, Charles Schwab and TIAA-CREF are all good choices. Look through the bond funds each company offers--investments consisting of investment grade bonds will be listed as either high grade corporate bond funds or simply investment grade bond funds.
- 4). Ask for a prospectus on each fund you are considering. Read the prospectus carefully, particularly the part about annual fees and expenses. Controlling costs is very important in a bond fund, since high fees can eat up a large percentage of your investment return.
- 5). Complete the application for the mutual fund investment. You will need to enter your name, mailing address, phone number and Social Security number. You might also be need to provide information concerning your occupation and annual earnings.
- 6). Mail the completed form, along with your check, to the address listed on the form. Some mutual fund families use two separate mailing addresses--one for regular U.S. mail and one for express delivery. Be sure you send your payment and application to the correct address.