Buying bonds has never been easy for income investors, but it's getting better.
Buying Individual Bonds is Expensive
Traditionally, to buy individual bonds you bought through a broker. However, unlike as with stocks, where you know what the market price is, and your broker takes a commission, with bonds you don't know the market price.
Sometimes the broker says they'll forgo their commission, acting like they're doing you a favor. However, that's a delusion. It just means they're making a lot more money by selling it to you at a price that's much higher than what they paid. However, you have no way to know what bond buyers bought that bond for at the same time, from other brokers.
However, you can buy some issues of new bonds from these sites:
directnotes.com/
internotes.com/
eu.internotes.com/ -- for European bonds
Sign up to get on their email list, and every Monday they'll notify you of what's available.
You can buy government bonds just by going to treasurydirect.gov.
Bond Mutual Funds are Even Worse
You can buy bond mutual funds, but they have a lot of disadvantages. Most of them are quite expensive. They have high management expense fees, and if you pay a front end load you're really throwing away a lot of your money. Then the manager buys and sells bonds, attempting to time the market. This runs up transaction costs. And because they don't have a crystal ball, it reduces performance.
The other big problem is that because a bond mutual fund owns lots of bonds together, you never receive your money back, as you do when you own the actual bond and it reaches maturity.
This is a problem because it means you're buying for capital gains, not income. When you buy one single bond, you don't have to care about how its market price goes up and down basic on interest rate fluctuations in the general economy. You can just cash your checks, then get the full face value of the bond returned to you upon maturity.
Bond mutual funds never mature, so you're locked into their ups and downs.
Bond Exchange Traded Funds
Bond Exchange Traded Funds make more sense, because you can buy a portfolio of bonds that will track the performance of a particular bond index. Therefore, their expenses are much lower.
You do have the disadvantage that the ETF shares will never mature, but you still get paid the income, so you can ignore the dips and rises in the overall market price.
The bond market is slowly becoming more efficient and transparent, as the stock market has been forced to do over the years. Thanks to technology, it should be possible to know about the sales of all bonds, so you can get a fairer price from your brokerage.
It may never become as easy as buying stocks is, because there are many bonds that don't trade much at all, so there is not a liquid market in them, but it can be a lot fairer and easier than it is now, especially for small income investors.
The following video explains some of steps the bond market has taken to become more transparent and investor-friendly:
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