No. of Recommendations: 0
Intercst, thanks for the posting. I hope you will share some of your expertise over on the Bond and Fixed Incomes board under Investors Roundtable.

Agreed that it is better not to buy bonds on the open market if you can avoid it. New issues appear to be a better deal. But in reality their costs are hidden.

If you follow the trail of a corporation that decides to issue a bond for financing: deals are struck along the way, the expensive services of the investment banker are retained to price the bond, decide on the coupon and maturities, and get it rated, and finally a distribution mechanism offers the bond to the individual willing to buy it. Meanwhile mechanisms are set up to record who owns each bond and pay the interest payments.

Its a pretty good bet the corporation that issues the bonds pays well for all these services. The individual that buys it pays some of it too.

Some see this as an antiquated or even shady side of Wall Street. But its a valuable service. The question is can it be made more efficient. Bonds do provide capital for those who need it--presumably at a price they feel is competitive or attractive. In reality it gives corporations more options for financing. And it gives investors willing to take the time to learn attractive but usually conservative investment opportunities.
Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.