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How to Buy Bonds in Australia

By Will Ellis
Last Updated on January 1, 2024
How to Buy Bonds

Any professional investor’s education should include guidance on how to acquire bonds. 

Equities and fixed income tend to be distributed together in a well-diversified investing plan, allowing traders to withstand turbulence while gaining gains along the way.

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While there is speculation that treasury bills will perform much better than stocks, this article isn’t financial advice. We intend to examine the fundamentals of purchasing bonds in Australia.

Table of Contents:

At a Glance 📚: How to Buy Bonds in Australia

  • Since bonds differ from stocks in several ways, most traders should diversify their holdings by including bonds in their portfolios.
  • Bonds are fixed-income instruments that serve as a representation of obligations, making you—as one of the holders of bonds—a lender or creditor.
  • Although it might be simpler to acquire a mutual fund or ETF that specialises in bonds, several brokers now allow customers to buy individual bonds online.
  • Without using a broker, you can buy government bonds directly from websites supported by the government.
  • For citizens of some communities, municipal bonds may provide income that is tax-exempt.

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Why Invest In Bonds?


Bonds can be a fantastic investment choice for prospective traders since they frequently provide a consistent cash flow. 

Better yielding than money market funds and with less instability than stocks, a well-diversified bond fund may offer a regular income stream.

Today, bonds are still favoured by many people even when rates of interest are low because of the relative peace of mind they provide. That’s compared to other investments like equities, let alone the peaks and troughs of crypto.

According to Rich Powers, Head of Vanguard’s ETF Product Management division, fixed-income investing aims to add fund variety. “Stocks fell almost 13% in the year 2022, according to the US stock market’s return. US financial bonds increased by a little over 5%.”

This is significant because a diversified portfolio of stocks and bonds enables investors to experience less volatility.

Similar events have occurred in Australia, where bonds are now a more appealing investment due to the AU share market’s 13% decline since 2022’s beginning. Bonds are regarded as a “safe pair of hands” by many traders—their government has never missed a bond’s primary or interest obligation. 

Due to that reliability, it is quite usual for Australians’ default superannuation funds to include bond exposure.

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How Australian Bonds Work

Australian Bonds

Bond investing is a kind of lending of money (you are the lender) in exchange for recurrent payments, or “coupon interest payments.” According to Moneysmart, all bonds see an agreed-upon face value upon being created, and if you retain the bonds until it matures, you will get their face value (or principal).

A bond’s market price, which may be lower or greater than the face value, will be received if you trade it before it matures.

Government bonds and corporate bonds are the two main categories of bonds. The riskier of the two, corporate bonds, will be discussed first.


Corporate bonds are a mechanism for big businesses to acquire capital to fund their initiatives. They are often issued and exchanged on the over-the-counter (OTC) market. It is uncommon for the everyday mom-and-pop trader to invest in corporate bonds—that’s because the required minimum investment is frequently in the $100,000’s range.


Unlike semi-bonds, which may only be purchased and sold through state and territory treasury companies, the regular Australian government bond (AGB) promises a rate of return on the bond’s value when held to maturity.

Exchange-traded Treasury Bonds are a popular choice for investors seeking a consistent return on their bonds (eTBs). You may invest in this fashion on the ASX in two different ways: ordinary (eTBs) or Treasury Indexed Bonds (eTIBs).

What distinguishes the two, then?

You can purchase or sell Exchange-traded Treasury Bonds (eTBs) whenever the 🏛️ ASX (Australia’s premiere exchange) is available and receive coupon interest payments, which are typically made every half-year. These securities have a set yearly interest rate and offer bond ownership through CHESS Depositary Interests (CDIs)—when the bond matures, the investor is given their loan back.

How to Buy Bonds


The common investor may access the bond market in a variety of ways, and we’ve included some of the more well-liked options below:

Through a dealer: You will probably need to use a broker’s services if you wish to purchase bonds that are not exchanged openly. Stockbrokers can assist you in accessing this marketplace and purchasing bonds directly from the firm issuing them because most corporate bonds need a sizable investment.

Through managed funds: A managed fund is a terrific method to get exposure to bonds, and the fact that it is handled, as the name implies, is what draws many investors to this route—although it is a far more active kind of investment and the costs may very well be greater.

Through an ETF: Many retail investors will enter the bond market through ETFs, which follow particular kinds of bonds such as US high-yield bonds, Government bonds, or even far back-dated Australian government bonds—if they lack the funds to invest in corporate bonds, which is the case for many.

Bond Buying Risks


Let’s start with Government Bonds risks. 

Despite the fact that government bonds are one of the safer investments, there are still risks associated with any investments. The Australian Government emphasises that one danger of investing in non-indexed Treasury Bonds is that the worth of the bond will often decline if inflation goes up

Additionally, it stipulates that the federal government could at any time transform holdings of eTBs to the underlying Treasury Bonds immediately recorded in the Commonwealth Stock Registry, “subject to a minimum term of 3 months’ notice.” 

Investors under this scenario would continue to receive coupon payments, but they would not be able to sell their stake on the market (ASX).

What about Corporate Bonds risks? 

The Moneysmart website cautions buyers that fraudsters are common in the market for corporate bonds, so make sure you conduct a thorough research first—for instance, the Moneysmart advisor suggests the following:

  • ✔️ Seeing whether the prospectus is posted on the ASIC offer notice board. If it isn’t, the bond is probably a hoax, the website advises.
  • ✔️ Confirming the legitimacy of the source of the offer or prospectus. Visit the issuer’s website to download the prospectus and application form (including the bank account information) if you’re unsure.
  • ✔️ Ensuring that you have access to the bond. Some bonds, like green bonds, are only available when bought through managed funds. If someone offers you these kinds of investments, exercise caution.

The need to be conscious of the possibility that an investment in a company will fail and won’t be able to fulfil your coupon obligations is the most crucial of all. To reflect this danger, their interest rate is higher… By comparison, it’s much harder for government to fail—as it’s typically far bigger. 

📖 Moneysmart corporate bonds handbook.

FAQs — How to Buy Bonds in Australia

Bonds in Australia are subject to tax, right?

Yes. Taxes must be paid on any income that was acquired through capital gains or interest. Australians must pay tax at their marginal tax rate on their investment income. Moneysmart points out that because investment bonds are structured differently than normal bonds and because their returns are subject to the corporation tax rate of 30%, they may be tax-effective for people who pay higher tax rates. For further information on paying tax on bonds, speak with your accountant.

Are Australian bonds a wise financial decision?

We do not give out financial advice. But, in comparison to many other asset classes, including commodities and even corporate bonds, they are almost unquestionably a safer investment. This is due to the fact that AU investments are very safe because the Australian government has never neglected to pay investors’ coupon payments or the principal at maturity. Due to the lower interest rate of return than corporate bonds, they might not be suitable for investors seeking a greater degree of risk exposure. 


Adding bonds to your investment portfolio—whether as individual bonds or ETFs—gives it an aspect of diversification and potentially steady income. You must conduct due diligence on all bond-related investments: To assist you in making decisions, do your research on the issuers and, if at all feasible, speak with a professional financial investor.

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