bond investing

5 Reasons Why IncomeClub Is Better than DIY Bond Investing

Until recently, you had only one of two options when investing: you could do it on your own, or hire an investment advisor.

Many investors question why they cannot invest in bonds on their own. What are the advantages of investing in bonds with IncomeClub compared to “Do It Yourself” (DIY) investing?

Obviously, there are a number of online brokers who offer bond trading services. However, the bond market is pretty complicated compared to the stock market.

Here are five reasons why you should choose IncomeClub over DIY investing with an online broker.

Fiduciary Investment Management Service for Those Interested in Bond Investing

At IncomeClub, we provide investors interested in bond investing with an essential financial investment management solution tailored to their needs and are committed to delivering world-class fiduciary service. IncomeClub is an SEC-registered investment advisor and is not affiliated with any broker-dealer.

Fiduciary service means that we put our clients’ interests first. We sell bonds neither behind any brokers’ inventory nor behind any bond issuer.

At IncomeClub, we also consider a broad range of factors in determining the suitability of any investment for any particular investor.

Those factors include everything from the nature of the investment to current market trends, personal needs, the investor’s objectives, individual risk profiles, and a large number of others.

Investment Research Prior to Bond Investing

Before we identify bonds that meet or exceed our target criteria, we first track thousands of bond issues and study their fundamentals. Providing our clients with ideal opportunities is our sole priority.

In addition, we use third-party research. This allows us to understand business-specific credit risks, and identify superior investment opportunities for our clients.

It is unlikely that a DIY investor has the time and opportunity to conduct such comprehensive research.

Bond Allocation with No Hassle

IncomeClub handles the bond allocation for you to alleviate any headaches involved with bond investing.

There is no need to spend time searching for the right bond, checking current portfolio allocation and determining which bond should be purchased at the moment.

IncomeClub algorithms take into consideration your goals, time horizon, and current holdings, and create the most optimal bond allocation for you.

They then scour bond marketplaces and find the right bond available on the market.

Finally, IncomeClub initiates purchase orders to buy bonds at best price.

Low Minimum Purchase

Many online brokers still buy and sell bonds over the phone. They still keep bond-trading desks and have high overhead costs to provide service to clients.

This is one reason why brokers have established a high minimum to purchase a particular bond in order to have enough commission to cover a transaction cost. On average it is $5,000, but sometimes it is up to $10,000.

IncomeClub has a partnership with Interactive Brokers, one of the most reputable online brokers in the USA. Interactive Brokers does not maintain a physical bond desk but provides electronic access to various bond marketplaces.

Interactive Brokers manages to keep not only a low commission but a subtle minimum purchase size of only $1,000 for Treasuries and $2,000 for most corporate issues.

Such a low minimum threshold allows clients to build a diversified portfolio with a much lower total dollar value of the portfolio.

Low Execution Cost

We have already mentioned above that our partner Interactive Brokers keeps super small commissions for bond trading.

In addition, to ensure costs are minimized while bond yields are maximized, we usually bundle smaller retail orders into larger institutional-range orders with a variety of trading firms and platforms through Interactive Brokers.

In the End

Considering all the benefits the IncomeClub platform offers, the tiny 0.25% AUM annual management fee looks like a deal.