Investment products

Bonds

Diversify your investment and generate income with a less risky alternative to stocks.

Investment products

Bonds

Diversify your investment and generate income with a less risky alternative to stocks.

We have an extensive selection of fixed income investments.

What are bonds?

Bonds are loans you make to a government, government agency, or corporation, which they use to finance projects and other needs. The bond issuer agrees to repay you at a fixed interest rate by a specified date, or maturity.

You may want to consider investing in bonds if:

  • You’re saving for a goal, like a house, or college, or are looking for fixed income in retirement.
  • You want to focus on a specific credit quality or maturity.
  • You'd like exposure to specific state or corporate issuers or to certain industries.
  • You're looking for income with tax advantages.

Learn more from our video series:

What are bonds?

Bonds are loans you make to a government, government agency, or corporation, which they use to finance projects and other needs. The bond issuer agrees to repay you at a fixed interest rate by a specified date, or maturity.

You may want to consider investing in bonds if:

  • You’re saving for a goal, like a house, or college, or are looking for fixed income in retirement.
  • You want to focus on a specific credit quality or maturity.
  • You'd like exposure to specific state or corporate issuers or to certain industries.
  • You're looking for income with tax advantages.

Learn more from our video series:

Types of bonds

U.S. Treasuries

These are considered the lowest risk bond investment. They have high credit quality, tax advantages, and liquidity. You’ll have to pay federal income tax on interest from these bonds, but the interest is generally exempt from state tax. 

Learn more

Government agency bonds

These bonds are typically high-quality and very liquid. Most agency bonds are taxable at the federal and state level. Some are fully backed by the U.S. government, making their credit risk lower than other types of bonds.

Learn more

Municipal bonds

These bonds are issued by states and other municipalities. They have low risk compared to other investments because the issuer has the ability to raise money through taxes—but they're not as safe as U.S. government bonds, and it is possible for the issuer to default. Interest payments are exempt from federal taxes, and some may even be exempt from state and local taxes.

Learn more about agency bonds

Learn more about GNMA bonds

Corporate bonds

These bonds are issued by companies, and their credit risk ranges over the whole spectrum. Interest from these bonds is taxable at both the federal and state levels. Because these bonds aren't as safe as government bonds, their yields are generally higher.

Learn more

U.S. Treasuries

These are considered the lowest risk bond investment. They have high credit quality, tax advantages, and liquidity. You’ll have to pay federal income tax on interest from these bonds, but the interest is generally exempt from state tax. 

Learn more

Government agency bonds

These bonds are typically high-quality and very liquid. Most agency bonds are taxable at the federal and state level. Some are fully backed by the U.S. government, making their credit risk lower than other types of bonds.

Learn more

Municipal bonds

These bonds are issued by states and other municipalities. They have low risk compared to other investments because the issuer has the ability to raise money through taxes—but they're not as safe as U.S. government bonds, and it is possible for the issuer to default. Interest payments are exempt from federal taxes, and some may even be exempt from state and local taxes.

Learn more about agency bonds

Learn more about GNMA bonds

Corporate bonds

These bonds are issued by companies, and their credit risk ranges over the whole spectrum. Interest from these bonds is taxable at both the federal and state levels. Because these bonds aren't as safe as government bonds, their yields are generally higher.

Learn more

Understand the minimums and fees

We offer two ways to buy bonds through our platform:

  • New issues are purchased directly from the issuer. 
  • Secondary trades are purchased from other people who are selling their bonds.

Note: Vanguard Brokerage charges an additional $25 broker-assisted fee for secondary trades placed over the phone.

See the commission & fee schedules for exclusions

Minimum amount

  • For most bonds, $1,000, with additional purchases in increments of $1,000.  
  • For municipals bonds, $5000 with additional purchases in increments of $5000. 
  • All fixed income trades are subject to dealer minimums. 

New issues

$0

Secondary trades

$1 per $1,000 invested


Ready to invest in a bond?

New to Vanguard or looking to consolidate your savings? 
 


Already a Vanguard client? Log in and get started.
 


Ready to invest in a bond?

New to Vanguard or looking to consolidate your savings? 
 

Already a Vanguard client? Log in and get started.
 

Disclosures 

All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss.

Bond funds are subject to interest rate risk, which is the chance bond prices overall will decline because of rising interest rates, and credit risk, which is the chance a bond issuer will fail to pay interest and principal in a timely manner or that negative perceptions of the issuer's ability to make such payments will cause the price of that bond to decline.

Investments in bonds are subject to interest rate, credit, and inflation risk.

While U.S. Treasury or government agency securities provide substantial protection against credit risk, they do not protect investors against price changes due to changing interest rates. The market values of government securities are not guaranteed and may fluctuate but these securities are guaranteed as to the timely payment of principal and interest.

Although the income from a municipal bond fund is exempt from federal tax, you may owe taxes on any capital gains realized through the fund's trading or through your own redemption of shares. For some investors, a portion of the fund's income may be subject to state and local taxes, as well as to the federal Alternative Minimum Tax.