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Five ways to buy bonds

by , 17 February 2015

If you're looking for an investment opportunity with lower risk than investing in shares, bonds are worth considering. They're also a good addition to your portfolio to lower your overall investment risk.

So if you want to buy bonds, what are your options?

There are five main ways you can gain exposure to bonds.

Read on to find out what these are…


How to invest in bonds

#1: Buy bonds when they’re first issued


To buy bonds when they’re issued, you can buy them directly from the National Treasury via a primary market maker.

A primary market maker is a dealer that the National Treasury has authorised to buy bonds directly.

In return for this, the primary market maker has to quote buy and sell prices for the most liquid government bonds available.


#2: Buy bonds from the secondary market


Through your stock broker, you can buy bonds from the debt market. This is much the same process as buying and selling shares.


#3: Buy bonds directly from the government


You can do this by investing in RSA retail savings bonds. This is an easy way to buy bonds and you can invest from just R1,000.

If you want to know more about investing in RSA retail savings bonds, go here.


#4: Trade bond futures


You can do this through a stock broker offering futures trading. As well as being able to trade futures of South African bonds, you can trade other interest rates products.

These products all fall under the interest rate derivatives market of the Johannesburg Stock Exchange.


#5: Invest in bond unit trusts


If you don’t want to pick individual bonds to invest in, you can opt to invest in a unit trust focusing on bonds. This gives you instant diversification and is a low-cost alternative.

So there you have it, five ways to buy bonds.

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Five ways to buy bonds
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