Which Brokerage for Direct Bond Purchase?

Discussion of the Bond portion of the Permanent Portfolio

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MiniB

Which Brokerage for Direct Bond Purchase?

Post by MiniB » Fri Sep 10, 2010 3:18 pm

I considered switching to PP 2 years ago and did research on direct purchasing bonds and was disallusioned by the costs involved, at least with the brokerages I had at the time.

I currently have brokerages with USAA, Schwab, and Vanguard.  I would strongly like not opening a new account if possible.

My plan is to buy 30 year bonds with about 29.5 years left on the secondary market to start out.  Then during rebalancing next year, IF I need to buy more bonds, then I will buy a new set of 30 year bonds with 29.5 years left. 

When any bonds hit 25 years I will sell.

I would prefer NOT to have to buy the bonds at auction because then I have to wait around for an auction and remember to participate on that specific day.  To me, the PP is nice due to not having to waste my life working on the portfolio.  If that's true I want to buy secondary bonds.  However when I did my initial research, a couple brokerages offered free auction bond purchases but wanted like $50 for secondary market trading.  At that point the ER would be higher than buying TLT.

Also I am worried about costs on selling the bond at the 25 year mark.

Do USAA, Schwab, or Vanguard fit this bill?  If not what are the best brokerages to use?
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Storm
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Re: Which Brokerage for Direct Bond Purchase?

Post by Storm » Tue Sep 14, 2010 6:25 pm

I'd be willing to bet that any of the three brokerages you mentioned will let you buy bonds directly from them.  There are usually no fees associated with buying bonds from primary or secondary markets.  Call your broker and asked for the "fixed income desk" and I'm sure they can walk you through how to do it online.

I use Fidelity and they were very helpful with this.
"I came here for financial advice, but I've ended up with a bunch of shave soaps and apparently am about to start eating sardines.  Not that I'm complaining, of course." -ZedThou
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