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.
Benefits of investing in bonds
Invest in hundreds of bonds with just one fund
Diversify your portfolio without worrying about investing in and managing multiple individual securities. You can choose from more than 100 Vanguard bond funds or a variety of bond funds of your choice.
Types of bonds
Understand the minimums and fees
We offer two ways to buy bonds through our platform. For more details on fees, see the Vanguard Brokerage Services® commission and fee schedules.
New issues are purchased directly from the issuer.
Investment minimum:
Most bonds: $1,000, with additional purchases in increments of $1,000.
All fixed income trades are subject to dealer minimums.
Commission: $0
Secondary trades are purchased from other people who are selling their bonds.
Investment minimum:
Most bonds: $1,000, with additional purchases in increments of $1,000.
Municipal bonds: $5,000 with additional purchases in increments of $5,000.
All fixed income trades are subject to dealer minimums.
Commission: $1 per $1,000 face amount ($250 maximum)
Note: Vanguard Brokerage charges an additional $25 broker-assisted fee for secondary trades placed over the phone. See the commission & fee schedules for exclusions
How to buy bonds at Vanguard
How to buy bonds at Vanguard
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Finding individual stocks and bonds
Investing for life events
Strategies for investing in individual bonds
Frequently asked questions
Bonds have both pros and cons. They're designed to provide a steady income stream through interest payments and are often less risky than stocks. However, bond yields can be lower than other investments.
The best time to invest depends on market conditions and interest rates. To decide if bonds are right for you, consider your goals, risk tolerance, and time horizon.
When interest rates rise, new bonds with higher interest rates are issued, which makes them more appealing to investors. As a result, existing bonds with lower interest rates become less attractive and the value decreases.
If investors sell their bonds before they mature, they may receive less money than what they initially paid because buyers can get new bonds with higher interest rates. However, if investors hold onto their bonds until maturity, they’ll receive the full face value.
The bond market is where investors buy and sell bonds. When you buy a bond, you're lending money to the issuer, and they promise to pay you back with interest over time. The bond market differs from the stock market in that stocks represent ownership in a company, while bonds represent debt.
When you own stocks, you’re part-owner of the company and can make money if the company does well. But with bonds, you're a lender and earn interest on your investment. The bond market is generally seen as less risky than the stock market because bondholders get paid back before stockholders if a company goes bankrupt.
Short-term bonds are bonds that have a short time frame to maturity, usually a few months to a few years. They’re less risky than long-term bonds because they aren’t affected as much by changes in interest rates. The benefits of short-term bonds, compared with long-term bonds, are that they:
- Have lower risk.
- Allow you to access your money sooner.
- Can provide relatively stable and predictable returns.
Based on investment goals and risk tolerance, short-term bonds may not be suitable for all investors.
When you buy a stock, you become part owner of a company. This means you can make money if the company does well and its stock price goes up. When you buy a bond, you’re lending money to a company or government that promises to pay you back with interest over time.
Bonds are generally considered less risky than stocks because you’re paid back before stockholders if the company faces financial trouble. Both stocks and bonds can be good investments, but they have different levels of risk and potential rewards.
Yes. You can get advice from Vanguard by using our robo-advisor or working with a financial advisor who can provide ongoing portfolio guidance and access to exclusive tools.
For more information about Vanguard funds, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.
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.