Personal Bond Investment Training

In “Do You Want to Make Money? Part 2”, I showed you two online brokerage accounts. I also talked about a bond that I purchased, getting a “Yield to Maturity” of 14.48%. This blog is a training blog designed to show you how to find bonds making a yield of 10% to 20%, with a Standard and Poor’s Rating between “B-“ to “BBB.” For this exercise, we will find bonds with these criteria.

Go to the http://www.optionsxpress.com/index.aspx website by clicking on this site. For training, open an account by clicking on “Open an Account” and follow the instructions. You will have 30 days to use this account (general cash, IRA, company) for free before your free time will expire. When they ask, how did you find out about this firm? Type “Customer Darnell L Williams.” If you feel like keeping the account but have no money to invest right now, just buy a few shares of Ford Stock (Stock Symbol F). As of July 4, the stock sold for $10.28. Two shares will cost you $20.56 plus about $10 commission. That will hold your account open until you can get some money together and start some serious investing.

Once your account is open, click on Login at the top of the screen. Then put in your User Name and Password. Press Enter. Place your curser over “Trade.” You will see “Bonds.” Click on “Bonds.”

Exercise: We will look for bonds that mature in 5 years or less. Click on the intersection where “5yr” and “Corporates A” meet. Click on “Advance.” Choose “Corporate” by selecting it from the drop down window that says “Treasury”. In “Maturity” place 1yr in “From” and “5yr” in “To.” In “yield” put 10% in “From” and 20% in “To.” In “S&P Rating” put “B-“ in “from” and “BBB” in “To.” Take the check mark out of “Or.” Sort by Maturity, then by Yield. Make the sort by Yield, Descending. Press Search at the bottom of the inner screen.

You will get a list of Corporate Bonds. Examine these bonds. Click on the name of the bonds and get more information. Look at the “QTY” column. Here you will see how many bonds are available, the minimum amount of bonds that could be purchase per transaction and how many bonds you have to buy in increments. For example, if it says that you should buy bonds (5/5), that means that you buy 5 bonds at a minimum and if you want more, it has to be bought in increments of 5. That is 5, 10, 15, 20, 25, and etc.

To make a trade click on “Trade” at the right of the line. If you just want to make a calculation of the transaction that you want to conduct, click on “Calc.”

If you have been following my blogs then you have enough information now to do a bond trade. You can explore this website for more information to help you with your investment needs. Good luck and good investing!