Charles Schwab has a powerful website with tools to trade many investment classes. Among these are fixed-income securities. Here’s what we really like about Schwab for bond trading:

Large Selection

Schwab has access to over 60,000 bonds (including more than 20,000 munis) through its partnership with more than 200 fixed-income dealers. It delivers over 1,000 new issues of municipal and corporate debt every year.

Schwab is one of the few brokerage houses to offer esoteric fixed-income assets like commercial paper, asset-backed securities, collateralized mortgage obligations, and foreign bonds.

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Excellent Pricing

Bond trades at Schwab come with some of the best pricing in the industry. Treasury securities, including both secondary and auction trades, cost $0 to buy and sell online. Bonds, bills, notes, and TIPS are all included in this unbeatable commission.

New certificates of deposit have a selling concession in their prices, so no actual commission is assessed. All other fixed-income securities will cost $1 per security with a $10 minimum per trade (and a $250 maximum). Examples of bonds that will fall into this category include munis, STRIPS, agencies, and corporate bonds.

Commissions on the unconventional debt securities like foreign bonds and commercial paper will vary.

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Bond Education

Beginners at Schwab will find lots of learning materials devoted to fixed-income investing. These resources are available on both the website and mobile app. On the latter device, tap on the Learn icon in the bottom menu, then select Investments, then Bonds. On the former platform, click on Products in the top menu and select the link for bonds, CDs, and fixed income. This link appears under the Investment Products section.

During our investigation, we found the following resources:

8 Common Bond Yields
Choosing Out-of-State Munis
Understanding U.S. Agency Bonds
CD & Treasury Ladder Builder (3:32 video)

User-friendly Research

Schwab makes it really easy to find bonds on its website (the mobile app doesn’t have a bond search engine). Underneath the Research tab, there is a link for fixed-income securities. Click on this to pull up a matrix with yields and maturity dates. Each field is hyperlinked with the relevant yield, which is delayed by 15 minutes and includes any and all transaction fees. Click on this hyperlink to pull up a list of specific bonds that meet the parameters.

The list of bonds can be sorted by various criteria, such as coupon, maturity, and yield to worst. Clicking on the title of a bond generates a pop-up window with more details, such as available quantity, coupon frequency, and price.

Order Entry

In the search results, a buy link is in every row, so pulling up the order ticket is really easy. A green buy button also appears at the top of the pop-up window just discussed. Each link produces the same order ticket.

Schwab’s fixed-income order ticket is a breeze to use. It automatically adds three zeroes to the end of the amount to purchase, which makes filling out the ticket foolproof (type in a 3 to purchase $3,000 of the bond offering).

There are two order types: market and limit. The market order uses day orders, while limit orders are fill-or-kill.

Ladder Builder

Investors who want to purchase multiple bonds simultaneously can use Schwab’s ladder builder. This tool can be used to create an order for up to 10 CDs, Treasuries, or a combination. It can be found on the matrix we have already explored. There is a tab at the top for the ladder builder.

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To create a ladder, simply enter the amount you want to invest ($1,000 per rung) and select the specific bonds on the next page. A ladder can be saved, which is really convenient.

Fixed-Income Specialists

In addition to bond research, education, and trading, Schwab also has in-house bond specialists. These are financial advisors and stock brokers who specialize in fixed-income securities. It’s possible to schedule a conversation over the phone with one of these experts at zero cost. To do this, scroll down on the bond informational page on Schwab’s website to the contact form at the bottom. Supply the requested information and submit the contact request (login credentials are required to do this). A bond rep will call you back.

Bond Funds

Besides the individual bonds Schwab offers, it has more than 2,000 bond funds available for trading. Many of these have no transaction fees and no loads. The bond funds include both mutual and exchange-traded products. These might be a little easier to trade than individual bonds, especially mutual funds. Thus, bond funds may be particularly useful for beginners. Here are a few examples we found:

American Funds Tax-Exempt Bond Fund (AFTFX)
Eaton Vance Short Duration High Income Fund (ESHAX)
Goldman Sachs Investment Grade Credit Fund (GSGAX)

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