Online Bond Buying: The Hidden Pitfalls Investors Must Know

• Online bond buying is frictionless, but many investors get caught out due to differences in how bonds are marketed versus how they behave.
• Most online bonds are from the secondary market; always check 'yield to maturity' as the price paid is rarely the face value, impacting actual returns.
• Bond prices fall when interest rates rise, affecting even those planning to hold till maturity; longer-term bonds carry higher risk.
• A high coupon often signals weaker finances or higher risk, not a gift; credit ratings can be slow to reflect true risk.
• Selling bonds online is harder than buying, as many corporate bonds have low liquidity, potentially forcing sales at a discount or long waits.