Can You Buy Bonds on Robinhood?
You cannot directly buy bonds on Robinhood. However, you can buy bond ETFs to gain bond exposure.
Key Takeaways
Robinhood is primarily known as a commission-free trading platform for stocks, ETFs, options, and cryptocurrencies.
While Robinhood does not offer the ability to buy individual bonds directly, it does offer the ability to trade bond ETFs, which are a type of exchange-traded fund that invests in a diversified portfolio of bonds.
Bond ETFs can provide investors with exposure to a diversified portfolio of bonds, while also offering the flexibility and liquidity of exchange-traded securities.
What is a Bond ETF?
A bond ETF, or exchange-traded fund, is a type of investment fund traded on stock exchanges, much like stocks. It is a basket of bonds that tracks an underlying bond index such as the Bloomberg Barclays US Aggregate Bond Index, which is a broad bond market index representing the US investment-grade bond market.
Bond ETFs offer investors a way to diversify their bond portfolios and gain exposure to various bonds with different maturities and credit ratings. They also offer the convenience and liquidity of trading on an exchange.
Popular Bond ETFs on Robinhood
TLT - iShares 20+ Year Treasury Bond ETF
The iShares 20+ Year Treasury Bond ETF, symbol TLT, aims to replicate the performance of an index comprising U.S. government bonds with a maturity of over 20 years. It provides investors with a way to gain exposure to the long-term U.S.
Treasury bond market and potentially benefit from the stability and security of these government-issued bonds. The ETF offers the convenience and liquidity of trading on an exchange, making it an accessible option for investors looking to diversify their portfolios and gain exposure to the long-term Treasury bond market.
TIP - iShares TIPS Bond ETF
The iShares TIPS Bond ETF (TIP) is an investment fund that tracks the performance of a basket of bonds issued by the U.S. government designed to protect investors against inflation. These bonds are known as Treasury Inflation-Protected Securities (TIPS). The ETF provides a way for investors to gain exposure to the TIPS market, which can offer a hedge against inflation and provide a stable source of income.
JNK - SPDR Bloomberg High Yield Bond ETF
The SPDR Bloomberg High Yield Bond ETF (SJNK) is a type of investment fund that aims to track the performance of a basket of high-yield corporate bonds issued in US dollars. These bonds are considered high risk/high reward because companies issue them with lower credit ratings than investment-grade companies.
VGSH - Vanguard Short-Term Treasury Index Fund ETF
The Vanguard Short-Term Treasury ETF (VGSH) is an investment fund that aims to provide income to its investors while keeping price fluctuations to a minimum. It does this by primarily investing in high-quality U.S. Treasury bonds, considered among the safest investments available. The ETF targets bonds with a maturity of 1 to 3 years, meaning the bonds will be paid back by the issuer to the holder in a relatively short period of time.
Treasury Bonds vs. Bond ETFs
Unlike buying individual bonds, purchasing bond ETFs does not require a large sum of money upfront and can be bought or sold like a stock.
Tax Advantages for Treasury Bonds
Treasury bonds are issued by the United States government and are considered to be among the safest investments available. One of the main advantages of investing in treasury bonds is their tax benefits.
Treasury bonds are exempt from state and local taxes, making them an attractive investment for those in states with high taxes.
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