I notice that Schwab now has a list of corporate bonds for sale on their website. Schwab charges $5/1000 as the purchase fee. What I want to know is whether Schwab's selection of corporate bonds is an OK pool to choose from and whether the $5/1000 purchase fee is reasonable? All things being equal, I would rather purchase within an existing account than open yet another account to buy bonds. Thanks for your opinions.
I notice that Schwab now has a list of corporate bonds for sale on their website. Schwab charges $5/1000 as the purchase fee. What I want to know is whether Schwab's selection of corporate bonds is an OK pool to choose from and whether the $5/1000 purchase fee is reasonable? All things being equal, I would rather purchase within an existing account than open yet another account to buy bonds.Don't know about their selection, but the purchase fee seems reasonable. If there are no other spreads between buy and sell prices, this is probably a decent deal.
$5 is not a bad fee....TD Waterhouse charges $2.50 per $1000 with a minimum of $35. The listing of bonds on Schwab is probably THEIR inventory....you should be able to call Schwab's bond desk and get any bond on the market. They will call to other dealers and buy them for you. This is at least the way it works with TD Waterhouse. Hope this helps.--Eric
What I want to know is whether Schwab's selection of corporate bonds is an OK pool to choose from and whether the $5/1000 purchase fee is reasonable? First, you are buying from their inventory. Whether or not it is an ok pool to buy from depends upon if you learn to ask the right question. The correct question is NOT whether the fee per bond is reasonable, but what is the net price to you for your bonds after the price they charge you per bond, plus commission, plus any other fees. Most times I beat the hell out of "discounters'" prices by buying right from sources I've developed over the years from other dealers. For example, if your broker charges you 91 plus $5/bond and I offer you the same bonds @ net 85 to you, who is screwing whom? Just because you are "only" charged a $5 fee, commission or whatever per bond does NOT necessarily mean that you are getting any kind of deal. Caveat emptor!!!!!!!!!! BTW, the same conditions apply to all types of bonds.
Well, of course I can figure out the net price to me. The problem is figuring out whether the net price to me is a good one. Most people would say I should "shop the bond." Maybe that is what you are saying. But I could pick a specific issue and call a multitude of brokers, but when I do a broker may not be able to quote that specific issue or the price may have fluctuated between calls, ...whatever. Plus I don't want to have to open a zillion accounts -- one for Bond A, one for Bond B, .... So what I am asking is: Are there any people out there who have shopped the brokers and determined that the Schwab Bond line is a reasonable place to buy one's bonds. Thanks.
From the small bit of comparison shopping I've done, e.g., the same issue as priced by Schwab, Waterhouse, CSFB, E*Trade and Tradebonds, Schwab is as good or better than the rest for a lot of 5. For a lot of 10, for which E*Trade charges no commission, E*Trade is often better. Even with a commision CSBF can often be better for buys, but they charge a fee when bonds mature, whereas most of the others don't. So you always need to look at both sides of the trade to compute your real costs.Of the group, only E*Trade and Tradebonds offer non-investment grade bonds. So it depends on what you're trying to buy. Of those dealers, Tradebonds is the worst about record keeping, account updating, etc., IMHO. I'm finding them to be an amateur outfit.And no matter what the brokerage offer is, try a limit order to split the spread. Often you'll get a fill, in effect saving at least a commission.Charlie
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