The Bond Finder Tool is designed to help you locate bonds that match your investment goals. To use the Bond Finder, log in to your Scottrade brokerage account and follow the steps below:
1. Go to the Trade tab and choose CDs & Bonds from the left navigation menu.
2. Hover your mouse over the Bonds tab.
3. Choose Bond Finder from the drop-down menu that appears.
The Bond Finder has six steps to help you customize the criteria for your bond investments:
1. Investment Type: Taxable vs Non-Taxable. It is important to consider your income requirements when selecting a bond. Interest paid on taxable bonds is taxed at the same rate as your earned income at federal, state and local levels. While any tax exemption may seem attractive in theory, it is important to remember that non-taxable bonds typically provide a lower yield and income than their taxed counterparts.
2. Select Bond Types. Choose a bond type to fit your investment portfolio.
3. How Much do You Want to Invest? Consider that the face value of most bonds is $1,000 per bond, and there is a one-time initial investment minimum of $5,000. Municipal bonds are only sold in five- bond increments and therefore require a $5,000 investment commitment; other types of bonds are available in $1,000 increments.
4. Investment Horizon. Decide when you want your bonds to reach maturity (the date that your initial investment, or principal, will be paid back in full). This timeline can range from less than one year to 20 years or more. An investor whose child will graduate high school three years from the investment date may choose bonds with maturity dates in two to five years to fund a college education. In contrast, someone who is focused on retirement investments may choose bonds that won't mature for 20 or more years.
5. Safety Level. Bond rating companies, such as Standard & Poor's, Moody's Investors Service, Inc., and Fitch Ratings, rate bonds based on their credit risk to help you determine the potential risk of your investments. Understanding bond ratings can help you choose a bond that matches your investment style.
6. Your State. Depending on the criteria you have entered, you may be asked to enter the state in which you live (this is only relevant to municipal bond investing). In most cases, once you have selected a desired bond rating the information gathering process is complete.
Enter up to 30 bonds in the Bond Finder tool and view a comprehensive report to see how your bonds work together. Click the purple Get Results button to view a list of bonds that meet your selected criteria. For additional information on bond investments, contact your local branch or visit Scottrade's Knowledge Center.
Bonds involve risks including, but not limited to interest rate risk, reinvestment risk, inflation risk, call risk, liquidity risk, credit risk, market risk, default risk, event risk and a risk of loss of principal. New issue offerings are sold by prospectus or offering circular available at www.scottrade.com. Investors should read these carefully. CDs may be covered by FDIC insurance while bonds may be covered by SIPC insurance. FDIC and SIPC coverage are not the same. Visit www.fdic.gov or www.sipc.org for more information.