If you want to invest in bonds online, first you have to research the bonds that interest you. After youve found the perfect individual bond, you need to know how to buy it. You can buy bonds in several ways:

Buying straight from the government: If youre interested in buying Treasuries, you can cut out the middleman and buy directly from the U.S. Treasury at TreasuryDirect. TreasuryDirect lets you buy

Treasury bills, notes, and bonds.

Treasury Inflation-Protected Securities (or TIPs), which are unique securities that pay you more interest and principal if interest rates rise.

Savings bonds, which are designed for individuals and dont pay very high interest rates and arent appropriate for investors looking for the best returns. But savings bonds might have some tax advantages, are backed by the government, and pay predictable interest. TreasuryDirects Tax Advantage Calculator can help you measure whether you can get a tax benefit from owning savings bonds. The Savings Bond Calculator can help you decide whether savings bonds are right for you.

Buying Treasuries from the government is a good option because theres no fee for most investors. You also dont have to invest much. The minimum investment is just $100 for Treasuries and TIPs and $25 for savings bonds.

Not sure how to use TreasuryDirect? TreasuryDirects Guided Tour steps you through the specific process of buying bonds through the site. The Federal Reserve Bank, the United States central bank, also provides instructions on how to buy Treasuries.

Buying from a mainstream online broker: Several of the bigger online brokerage firms (including Charles Schwab, E*TRADE, Fidelity, TD AMERITRADE, and Scottrade) also let you buy and sell bonds. But remember that the stock-trading commissions dont apply, and the bond commission can vary wildly depending on the broker and what kind of bond youre buying.

Several online brokerage firms have slashed the fees to buy bonds. At Fidelity, Schwab, and E-TRADE, you can buy Treasurys online for no commission and most other types of bonds, including agencies and corporate bonds, for $1 per bond.

Some brokers charge mark-up fees for bonds. Mark-up fees are added to the price of the bond. For instance, you might buy a bond for $1,000 but later see that you actually paid $1,045, where $1,000 is the price of the bond and $45 is the mark-up. Nothing is illegal about mark-up fees, and theyve been a common way for brokers to charge commissions for buying bonds. You just want to find out ahead of time how much the mark-up fee will be and confirm that you werent overcharged by reviewing the confirmation of your order.

Some brokers charge commissions when you buy Treasuries. TD AMERITRADE, for instance, charge $25. You should think long and hard before paying any commissions or fees to buy Treasurys because you can buy them for free and online from TreasuryDirect.

Buying with the help of a bond broker: Some brokers specialize in just bond trading. Zions Direct and JW Korth are two examples. FMSbonds.com specializes in municipal bonds.

Buying via a bond mutual fund: Buying individual bonds can be somewhat complex. You need to understand yields, prices, duration, and other cryptic measures of value.

Think twice before buying a long-term government bond mutual fund. Youll pay an annual fee for the mutual fund, sometimes 1 percent a year. Thats probably not a good idea considering you can buy Treasuries for free from TreasuryDirect.

Bond exchange-traded funds (ETFs): Another option for buying bonds is through exchange-traded funds. A bond ETF is ideal for investors who primarily buy stocks but want to add bonds to their portfolio and keep fees down. These ETFs track bond indexes, such as the Barclays Aggregate Bond index, which tracks a broad basket of bonds. Buying a bond ETF is the bond version of investing in a stock index like the Standard & Poors 500.

Its easy to get started. Just pick the bond ETF you want and buy it through your online broker just as youd buy a stock.

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