How to Invest in Debt Securities
- 1). Research several financial newspapers, like the Wall Street Journal, Barrons, or Investors Business Daily. Review information on bond funds and mutual funds. Look at the current yield column on the funds--this is the amount of return the fund is generating.
- 2). Contact several no-load mutual fund companies for information about the bond funds they offer. Look for mutual funds with low fees and expenses, as well as ones that charge no sales fees.
- 3). Review the prospectuses of various bond funds offered by the mutual fund family. Determine how much risk you are willing to take when investing in debt securities. You can choose ultra-safe debt funds that invest in nothing but government bonds and Treasury bills, or you can invest in riskier but potentially higher yielding funds that invest in corporate bonds.
- 4). Complete the application for the funds you want to invest in. You can generally complete a single application no matter how many funds you want to use. On the first part of the application you will list your name, address, Social Security number, and other identifying information. In the next section, you will list the funds you want to invest in, along with the dollar amounts or percentages you wish to allocate to that fund.
- 5). Indicate whether you want to have the investment income sent to your bank account or reinvested in additional shares of the fund. If you do not need the current cash flow, investing the dividends and other earnings into additional shares can help you build a bigger portfolio.
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