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Most bond transactions can be
completed through a full service or discount brokerage. You can also open an
account with a bond broker, but be warned that most bond brokers require a
minimum initial deposit.
Some financial institutions
will provide their clients with the service of transacting government
securities. However, if your bank doesn't provide this service and you do
not have a brokerage account, you can purchase government bonds through a
government agency (this is true in most countries). In Malaysia or
Singapore, you can buy bonds directly from the government through Bank
Negara (Center Bank) for Malaysia and Monetary Authority of Singapore (MAS)
for Singapore. Most of the commercial banks and investment banks in both of
the countries does provided bond trading services. All transactions and
interest payments are done electronically with the bank account.
If you do decide to purchase a bond through your broker, he or she may tell
you that the trade is commission free. Don't be fooled. What typically
happens is that the broker will mark up the price slightly; this markup is
really the same as a commission. To make sure that you are not being taken
advantage of, simply look up the latest quote for the bond and determine
whether the markup is acceptable.
Remember, you should research bonds just as you would stocks. We've gone
over several factors you need to consider before loaning money to a
government or company, so do your homework!
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