How to Trade Fixed Income Securities in Your Account

Investing in fixed income securities is one way to add diversity in your portfolio. Fidelity offers a wide range of bonds, CDs, and bond funds. Plus, we have the tools and expertise to help you build a strong strategy.

What are the advantages to trading fixed income securities?

Fixed income securities can create diversity in your portfolio.* They may help you better meet your asset allocation, income, cost, and/or tax needs. Before you begin trading fixed income products, you may want to brush up on some essential information. Fidelity offers a complete course on fixed income markets. Get started today with Learn About Fixed Income and Bonds.

What do I need to know?

Fixed income investments generally pay a return on a fixed schedule (with the exception of bond funds), though the amount of the payments can vary. Individual bonds may be the best known type of fixed income security, but the category also includes bond funds, ETFs, CDs, and money market funds. Fidelity offers a wide range of tools to help you trade fixed income securities. Learn about Fixed Income Tools and Services.

It's important to understand the risks that go hand-in-hand with fixed income products. These include:

  • Interest rate risks: As interest rates rise, bond prices usually fall, and vice versa.
  • Credit and/or default risks: Issuers could have bonds downgraded and/or be unable to pay interest or principal.
  • Call risks: Issuers may redeem bonds before they mature, which means you will not receive all of your interest payments, and you might need to reinvest and possibly receive lower interest rates.
  • Liquidity risks: If an issue is small and/or there are not many buyers, it might be hard to sell.
  • Other pre-payment risks: Some fixed income securities have options which may be exercised by the issuer or the borrower, ultimately affecting future interest payments.

Some types of accounts aren't eligible to trade fixed income products (with the exception of bond and money market funds). These include 529 plans, standalone mutual fund accounts, and cash management accounts.

Note: Trusts, investment clubs, non-prototypes, etc. may impose their own restrictions, but it's up to the customer to adhere to those restrictions.

Before you get started you’ll need to decide which type of fixed income investment is right for you. Take the time to get familiar with the various fixed income products we offer, including:

What to expect

There are a few ways you can participate in fixed income markets. You can:

  • Buy a money market or bond fund.
  • Buy or sell secondary market fixed income offerings.
  • Submit buy orders for New Issue Treasury, CD, GSE/Agency, and Corporate NotesSM inventory.
  • Submit an indication of interest to purchase new issue municipal bonds.
  • Buy ETFs on an exchange during the market day.

To trade bonds, CDs, money market or bond funds, enter the quantities as follows (please use numbers only; no dollar signs or commas):

  • Bonds and CDs, enter the number of bonds to trade in increments of 1 bond, where 1 bond/CD is equal to $1,000 (e.g., to invest $10,000 on a bond trading for $1,000 per bond, enter the trade for 10 bonds).
  • Bond funds usually have an initial order minimum of $1,000 to $10,000 (depending on the fund).

When your order is completed, you'll receive a trade confirm and under Order Status, you'll see that the trade was executed.

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