Lowest Bond Trading Fees. Brokerage With Cheapest Bond Commissions.



Ally Invest Bond Pricing


From its creation over 10 years ago, Ally Invest offered some of the lowest trading commissions on bonds, stocks, options and ETFs. The firm grew rapidly over the years, becoming one of the largest brokerage companies in the country. But their trading rates stayed at the same, very low levels. Currently Ally Invest is charging $1 per bond with $10 minimum and $250 maximum. Treasuries have $0 commission. Certificates of Deposit (CDs) are $24.95 per transaction.


Ally Invest Advantages

  • One of the cheapest bond brokers in the industry
  • Accounts have no maintenance or hidden fees
  • Highly rated customer service
  • $0 fee IRAs
  • Low price professional portfolio management


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Ally Invest Bonds Review

With Ally Invest customers can search, analyze and trade online corporate, agency, municipal, strips & zero's, and new issue securities, all from one robust platform, and at Ally Invest's discount trading fees. The brokerage house offers nine search capabilities across 10 different bond types, and clients can customize their search to fit their bond investment strategy goals and bond criteria.

Each bond type has a query definition page where customers can define the search, a query result page that lists the bonds that match their criteria, and a bond detail page where clients can get more information about any bond on the list.

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Brokerage Bond Fees List


Broker Rating Broker Bonds Fee Corpo
rate
Munic
ipal
New Account Promotion
Ally InvestAlly Invest rating

$1 per bond with $10 minimum, $250 maximumYesYes Up to $3,500 cash bonus + commission free trades for new accounts.
TD AmeritradeTD Ameritrade rating

Treasuries at auction: $25. All other bonds on a net yield basisYesYesTrade free for 60 days + get up to $600.
Capital One InvestingCapital One Investing rating

NANANAGet $50 when you open new non-IRA account at Capital One Investing.
Charles SchwabCharles Schwab rating

$1 per bond, $10 minimum, $250 maximumYesYesNone
ChoicetradeChoicetrade rating

NANANANone
Cobra TradingCobra Trading rating

NANANANone
EtradeEtrade rating

$1 per bond, minimum $10, maximum $250YesYes At E*TRADE, get $6.95 trades + 65₵ per options contract.
FidelityFidelity Investments rating

$1 per bond, $250 maximum; $50 maximum if maturing in one year)YesYesNone
FirstradeFirstrade rating

On a net yield basisYesYesUp to $300 Cash Rewards + 500 Free Trades.
Interactive BrokersInteractive Brokers rating

0.1%* Face Value (10 bps) if <= $10,000 Face Value; 0.025%* Face Value (2.5 bps) if > $10,000 Face ValueYesYesNone
Just2tradejust2trade rating

$15 + $1 per bondYesYesNone
KapitallKapitall rating

NANANANone
Merrill Lynch/EdgeMerrill Edge rating

On a net yield basisYesYesNone
Motif InvestingMotif Investing rating

NANANANone
Muriel SiebertMuriel Siebert rating

100 bonds or more - $2.50 per bond, from 50-99 bonds - $3 per bond, up to 49 bonds - $3.50 per bond; $35 minimum commission for listed corporate bondsYesYesNone
RobinhoodRobinhood Trading rating

NANANANone
SogotradeSogotrade rating

NANANANone
TradeStationTradestation rating

$14.95 + $5 per bondYesYes Get $5 per trade stock and ETF commissions. $4 per trade for IRAs.
TradingBlockTrading Block rating

$30YesYesNone
USAAUSAA rating

$25 + $3 per bondYesNANone
VanguardVanguard rating

On a net yield basisYesYesNone
WellstradeWellstrade rating

$50 per transactionYesYesNone

  * NA means Not Offered.


What are Bonds?


Many financial planners advise that a basic element of any financial plan to grow one’s wealth should include bonds. A bond, simply put, is a loan that an investor makes to a company or to the government. Officially, bonds are one of the two major forms of securities, with the other one being stocks. Bonds are securities that are issued by an entity with the promise to repay the person holding the bond under specific terms, with interest, after a particular period of time has passed, on a certain date. The date is known as the bond’s maturity.


How are Stocks and Bonds Different?


From the aspect of being a security, bonds differ from stocks in a couple of ways. For starters, the holder of a bond is, for all intents and purposes, a lender to a company or to the government. Inversely, the holder of stock in a company is actually a part-owner in that company. Secondly, stocks can be held for an indefinite period of time, while bonds mature after a set time period.


Who Issues Bonds?


In the U.S., bonds can be issued by local, state, and federal governments, or by corporations. The federal government is a major bond issuer, and typically issues bonds as a way to generate money to cover deficits in the budget. Local and state governments also issue bonds, but usually in doing so they are looking to raise money for community projects, like building a park, for example. When a corporation issues bonds, it is to raise capital for expansion or for investment.


How Do Bonds Work?


Bonds are a reliable investment, in most instances, and they carry with them very little risk. In their simplest form, bonds have three important features: the maturity date of the bond, the interest rate, and the denomination. For example, if you have a $1K bond that is issued to you at 3.75% interest for fifteen years, you will be paid either simple or compound interest on the bond until it matures. The interest income that you derive as a bondholder is taxable in most instances. The purchase of bonds is usually done via a broker, who is basically a “middle man” who makes a commission by buying the bonds at a discount and selling them to you at a profit.


What are Municipal Bonds?


Municipal bonds are a type of bond that many investors are attracted to because any interest that is received while holding the bond is exempted from federal income tax, and oftentimes, from any state or local tax. Municipal bonds are often issued to raise money for projects like building hospitals, schools, sewer systems, and other municipal projects that improve daily life within a community.


Should I Invest in Bonds?


Smart investors will build a diversified investment portfolio that consists of stocks, bonds, and other types of investments. No matter what your investment goals may be, bonds are a savvy choice. Bonds pay interest twice each year, providing bond holders with a stream of predictable income. This income stream is one of the top reasons that people choose bonds as an investment, since this can help them to preserve their capital. If you are saving for a specific future need, like putting your children through college, or even buying a house, bonds can be the best investment vehicle to help you reach those objectives. Moreover, if you want to increase your retirement income, the interest income from bonds can be quite lucrative, especially if you purchase bonds that are exempt from federal income tax.


How do Treasuries Work?


Although S&P downgraded the U.S. credit rating, the U.S. government is still the most reliable borrower in the world. That’s why U.S. treasuries are such a great investment. “U.S. treasuries” simply refers to U.S. Treasury bonds, which are also known as T-bonds. Treasuries might also be in the form of Treasury bills or Treasury notes. Investors look at the historical behavior of the United States Treasury in never defaulting on a debt as an incentive to invest in Treasury securities. Treasury bills, notes, and bonds are basically IOUs that the federal government issues in exchange for your money. When you buy Treasury securities, you are, in effect, loaning the government your money for a particular period of time. At the end of that time period, your securities will mature, and you will collect the face value of the security. In the interim, you will collect interest from your treasuries, with the exception being Treasury bills, which do not pay interest. The first use of treasuries occurred in World War I, when the U.S. issued Treasury bills to help balance out a high public debt. Treasury bills evolved to become the most popular type of short-term government-issued securities by the end of World War II.


Differences in Treasuries


There are some distinct differences in the three types of treasuries. One of those differences is in the maturities of the treasuries. Treasury bills, also known as T-bills, mature at either 91, 182, or 364 days, and are auctioned off every fourth Thursday. The interest rate for Treasury bills is determined by what bidders at auction are willing to pay, and can differ from auction to auction. T-bills do not pay out interest. Instead, they can be purchased at discounted prices. Treasury bills are the only securities offered by the Treasury that sell at discount. For instance, a Treasury bill that is worth $10K might be sold at a five percent discount for $9500. When that T-bill matures, the U.S. government will pay the holder of the bill the full price – in this instance, $10K. That is a $500 return on the initial investment.

Treasury notes, on the other hand, mature in two, three, five or ten years. Two year notes are auctioned monthly, while three year notes are only issued four times a year, and ten year notes are issued six times each year. Treasury notes pay interest twice yearly, and expire at what is called “par value”. Treasury bonds are issued in ten to thirty year maturities, and pay interest out twice per annum.


Tax Advantage of Treasury Bonds


One main draw for investors when it comes to Treasury bonds is that the interest income that they generate for investors is not taxable locally or on the state level. Nonetheless, interest from treasuries is taxable on your federal income tax return.


Buying Treasuries Direct


Any investor can buy U.S. treasuries direct – thus eliminating the middle man or the brokerage house from the deal, thanks to a special program that the government has initiated known as Treasury Direct. This program allows investors to set up their own account to purchase treasuries at auction, just like brokers do. In purchasing direct, investors bypass the brokerage fees or other transaction costs. The minimum investment is $1K for bonds, $5K for notes, and $10K for bills in order to participate in the program. The security’s par value and interest is paid to your account via the program, which is a convenience for investors.

As you can see, investing in treasuries can be quite rewarding. For those investors who cannot tolerate risk, treasuries may be the perfect option for growing wealth or building retirement income.


Updated on 3/5/2018.