How to Invest in Corporate Bonds

Trading Corporate Bonds

Like stocks and shares, corporate bonds have a secondary market. However, unlike stocks, institutional corporate bonds are typically traded in minimum sizes of £100,000 or more, making them inaccessible to all but the wealthiest investors.

Furthermore, they are typically traded from dealer to dealer "Over The Counter" (OTC) rather than on large exchanges such as the London or New York stock exchanges.

However, through WiseAlpha Fractional Bonds, investors can gain exposure to corporate bonds with as little as £100 using WiseAlpha’s digital market.

Learn about Corporate Bonds

The first step towards investing in corporate bonds is to learn how they work and the risks involved. There are a number of differences between bonds and stocks. Understanding these nuances can help you make better investment decisions. To get started, you can read our one-page introduction: What are Corporate Bonds?

Open & Fund a Corporate Bond Investment Account

Applying for an investment account is a straightforward process, and usually takes just a few minutes to complete.

Once the details you provide have been verified, you’ll need to fund your account by a minimum amount. With WiseAlpha, the minimum is £100, and you can add funds via debit card or bank transfer.

The great news about corporate bonds is that they are eligible to be invested through tax free wrappers. When you open an account you can select either a regular individual account or SIPP account.

SIPP

A SIPP or self-invested personal pension is a type of personal pension that gives you a far greater level of freedom about how you invest your retirement funds than you can get with any other pension. You are in complete control of how and where your money is invested - you make the decisions that will determine how your pension pot performs. Like all pension schemes, SIPPs qualify for up to 45% tax relief (46% if you’re Scottish) on the money you put into them. The annual limit for tax relief on pension contributions is £40,000.

Select Your Investments

Once you’ve opened and funded your account, it’s time to find your first investment. With WiseAlpha, you’ll be able to invest in over 100 different Fractional Bonds across a range of currencies, industries, and maturities. One of the great benefits about corporate bonds is being able to diversify yourself across so many different categories.

We offer a wealth of information about each investment on the bonds detail page so you can make the best investment for you.

To simplify investing even further we created Robowise.

Robowise - Automated corporate bond Investing

Robowise diversifies your money across different investments on the market giving you the choice of two income portfolios: Balanced or Adventurous.

• Intelligent, automated investing.

• Smart portfolio rebalancing.

• Automatic reinvestment.

Monitor your Investments

How often you monitor your investments is up to you. Corporate bond investing doesn’t have to require a huge amounts of input. Many of our platform users are ‘buy and hold’ investors who intend to hold their Fractional Bonds until maturity and reinvest their interest. Other platform users prefer to actively trade, periodically opening and closing positions based on their own convictions.

Sell your Investments

While many investors hold their corporate bonds until maturity, some investors will want to take gains on a bond that has gone up in value or sell away from a bond they no longer believe in.

Investors can put their Fractional Bonds up for sale at any time and the trade will happen as soon as there is a buyer. Please note that liquidity is not guaranteed.

Learn more about the benefits and risks of corporate bonds.