In the age of free stock trades, would you believe that many investors still pay tens of thousands of dollars in commissions to execute a single bond trade? In the example we provide in this article, a retail investor recently paid a $48,040 commission to purchase 2,000 Kroger (NYSE: KR) bonds. This is no isolated occurrence, as investors buying bonds through full-service financial advisors rather than through online brokerages regularly pay 2-point markups or markdowns when executing bond trades.
What's even more concerning is that these 2-point markups are a bargain when compared to