Getting into bond markets is easier than ever with the emergence of ETF bond funds. In the past, the only way to invest in bonds was to purchase them either directly from the issuer or on secondary markets. At a minimum, this generally meant putting up at least the face value of the bond which could mean you'd need at least $1,000 just to enter the door. And you'd be investing in a single bond from a single corporation or government, so diversity was not an option.

Later mutual funds made bond investing easier. Now investors could put up a few thousand dollars and get exposure to hundreds of bonds. If you had $5-$10,000 to get started with, you'd be able to build a diversified bond portfolio.

In recent years things have gotten a lot easier. The emergence of ETF bond funds, which are exchange traded funds that invest in bonds, means that investors can get in and out of bonds easier, faster, and at lower cost than ever before.

To see why you need to understand what an exchange traded fund (ETF) is. Without getting into the technical details of how the fund is put together, its good enough to think of it as a mutual fund that trades like a stock. Like a mutual fund, an ETF has a given benchmark. In the world of bonds, example benchmarks could be US Treasury Notes, California municipal bonds, or the Barclays high yield bond index. The shares of the ETF constitute investments in whatever securities make up the benchmark.

Three things make exchange traded funds very appealing, especially for small investors. Like mutual funds, exchange traded funds give investors diversity. ETF bond funds can represent underlying investments in 50-200 different bonds. Say you were investing in high yield or junk bonds. If you were buying bonds individually, $1,000 would give you exposure to a single bond. The chances of the issuer defaulting are high, and you would be at serious risk of losing your $1,000.

ETF bond funds mitigate this risk. If you took your $1,000 and put it in a fund that invested in 150 junk bonds, you'd be more insulated against default. A few of them might go into default or perform badly, but its very unlikely they all will.

The second major advantage of ETF bond funds are low costs. Mutual funds tend to cost more. With an ETF, some large financial entity acquires some asset (say invests in a large number of securities). Then they carve that asset up into shares and sell them. Since there is no active management, costs are low.

Third, and this is really the key, an ETF trades as shares of stock. Its an equity you can buy and sell on exchanges like the NYSE. You can get started with the price of a single share or a hundred shares. There are no investment minimums. You can sell on the market any time you like when markets are open. Getting in and out is extremely easy.

The diversity of ETF bond funds covers all aspects of the bond markets-so you can not only build a diversified investment in say municipal bonds, but you can have a completely diversified bond portfolio with investment in funds with US Treasuries, municipal bonds, investment grade corporate bonds, junk bonds, and even international bonds.

To see what's out there, visit the websites of the companies that offer exchange traded funds. One famous company is State street global advisors. They offer a wide variety of choices that go under the name "SPDRS". These funds provide opportunities to invest internationally, as well as in US bonds. Jump on over to their website and look for their "Fixed income" investments, where you'll find many funds indexed to Barclays Bond indexes.

There are other options as well. Others financial houses offer a wide variety of funds including iShares and powershares.

Since you can select among different types, be sure to diversify your exposure. Exchange traded funds make this easy, you can include low risk investments in your portfolio like US Treasuries and munis, or go with investment grade corporate. To get some high yields, you'll want to look at junk as well. The advantage of course, being that with an ETF you're not putting all your principal at risk on the chance a single corporation might default.