Investing in bonds is viewed as less risky and more predictable than investing in stocks. Bonds are commonly used to diversify an investor's portfolio. Below is a list of brokerage firms that offer not only the lowest commissions on buying bonds but also great easy-to-use bond research and trading tools.


Best Bond Brokerage Firm: Ally Invest

Ally Invest rating

Ally Invest is a true definition of a discount broker when it comes to trading commissions. The solid brokerage firm is well-known for one of the lowest in the industry commissions on stocks, options and mutual funds. The company also offers a great commission on bonds.

  • Bonds: $1.00 per bond with a $10 minimum and $250 maximum per transaction
  • Treasuries: $0
  • Certificates of Deposit (CDs): $24.95 per transaction

Ally Invest may act as a principal on any fixed-income transaction. In this case, a markdown or a markup will be added or subtracted from every purchase or sale. This markup or markdown will be included in the price quoted to an investor who will not be charged any commission or transaction fee for a principal trade.

Ally Invest provides great tools for finding/researching bonds such as the Bond Finder and the Bond Calculator. The easy-to-use Bond Calculator will help investors determine the value of a bond based on its description, which includes its CUSIP number, coupon, maturity, type and other features.

The Bond Finder helps investors choose types of bonds (treasuries, municipals, corporates, agencies, CDs or Strips & Zeroes) and filter them by the safety level (credit rating of a bond) and taxability (taxable, non-taxable or both). Additional features such as the desired investment amount and the time horizon can be specified to narrow the results.

Another great tool of the brokerage firm is the Bond Ladder Builder. By selecting types and specifying bond details, investors can build 2 to 21 rungs of ladders that suit their investment objectives and time horizon.

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Bond Investing Through ETFs and Mutual Funds With TD Ameritrade

4.5-star brokerage firm rating

  • A wide variety of newly- or secondary-issued debt securities, including CDs, Treasuries, agencies, corporate bonds and municipal bonds
  • 360 bonds ETFs, 33 of which are commission-free
  • 3,000+ bond mutual funds, including six commission-free bond mutual funds

At TD Ameritrade, the cost of investing into individual fixed-income securities is comparatively high. However, the brokerage firm offers one of the best selections of commission-free ETFs, which includes 33 bond ETFs. TD Ameritrade offers 360 bond ETFs. The cost of ETF trading is $6.95. There are more than one hundred commission-free exchange traded funds from 13 providers are available through its platform.

  • Treasuries at auction: $25 flat fee
  • CDs New Issue and Secondary: on a net yield basis
  • UITs New Issue and Secondary: placement fee from issuer

Also, TD Ameritrade provides the Premier List of mutual funds that have been rigorously evaluated by the independent experts at Morningstar Associates. The list includes top funds for a range of asset categories with the main focus on no transaction fees (NTF) funds. Investors can narrow down the list to bond mutual funds only and choose to include bond funds with transaction fees. The list of funds is updated quarterly to provide the top picks.

The premier list includes six commission-free bond mutual funds with 2- to 5-stars rating. Here they are:


Commission-free Bond ETFs Available Trough TD Ameritrade

  • Metropolitan West Total Return Bond Fund Class M MWTRX Best Bond Mutual Funds
  • Western Asset Core Plus Bond Fund Class A WAPAX, Rated Best Bond Mutual Funds
  • Metropolitan West Low Duration Bond Fund Class M MWLDX Best Bond Mutual Funds
  • T. Rowe Price Short Term Bond Fund PRWBX Best Bond Mutual Funds
  • Weitz Short-Intermediate Income Fund Investor Class WSHNX Best Bond Mutual Funds
  • PIMCO Short-Term Fund Class D PSHDX Best Bond Mutual Funds

TD Ameritrade offers great educational videos and research tools on bonds and other fixed-income investments. The Bond & CDs Wizard is a tool that helps investors find fixed-income securities that may suit their needs. Investors can choose one among three selections - find individual bonds and CDs, select a ready-made ladder or a monthly income portfolio and build their own bond/CDs ladder. After that, the Wizard will guide investors step by step through the process of finding and selecting investment options based on a specified time frame, quality, tax status and type of investment.

Moreover, TD Ameritrade offers one of the best selection of commission-free ETFs, which was ranked by Forbes the best selection among leading self-directed brokers. That is why TD Ameritrade is a leading firm on the list of top brokers for ETFs investing.

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What is a bond?

A bond is basically a loan given to a company or government by an investor who receives a regular scheduled interest payments on the money he has loaned and the return of the original principal.


What is a bond ladder?

A bond ladder is a combination of fixed-income securities with varying maturity dates. The maturity dates of bonds or CDs occur regular periods over the time which creates a laddered structure. Combining bonds with higher and lower risk, a bond ladder helps earn regular income payments and at the same time reduce interest risk.

What is a CUSIP number?

CUSIP stands for Committee on Uniform Securities Identification Procedures. Formed in 1962, this committee developed a system (implemented in 1967) that identifies securities, specifically U.S. and Canadian registered stocks, and U.S. government and municipal bonds.

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