Where to Buy Municipal Bonds

 

There are many asset classes to increase your money, among them bonds are also, there are many different classes in bonds also, one of them is Municipal bonds.

Friends all the details about Municipal bonds have been written in this article such as what are Municipal bonds and where to buy municipal bonds.

What is Municipal bonds

A municipal bond is a type of debt security issued by local state governments.

• School District Bonds: Funds are raised to build or renovate schools
• Highway Bonds: Funds were collected to maintain roads and bridges
• Water or Sewer Bonds: Funds are raised to upgrade water and sewer infrastructure
• Hospital Bonds:Funds are collected to build and expand hospitals

Municipal bonds work like loans which are made by bond holders as creditors. Interest is paid on the money invested by bond holders or investors

Types of Municipal Bonds

• A general obligation bond (GO) : It is a bond issued by the government. It is not issued based on the revenue of any specific project. It is issued from general funds
• A revenue bond: Interest and principal are paid to the lender from the sales proceeds
  

Where to buy Municipal bonds

• Primary market purchases: Municipal Bonds can be bought from local government
• Secondary market purchases: Can be buy from Debt Instruments 

Risks of Municipal Bonds

Municipal bonds have a lower default risk compared to corporate bonds.

The price of the bond also fluctuates when the interest rate changes. 

The price of the bond decreases when the interest rate increases, and the price of the bond also increases when the interest rate decreases.

The interest rates of longer-term bonds change more than the interest rates of shorter-term bonds

Some municipal bonds are called for redemption before the maturity date

Minimum Amount You Need to Invest in Municipal Bonds

Most municipal bonds require a minimum investment of $5,000
Some municipal bonds may be included in ETFs (exchange traded funds) and mutual funds

What Are the Benefits of a Municipal Bond

When compared to stocks and corporate bonds, the interest rate of municipal bonds is low but the 

risk is also low and your principal is stable.

Municipal bonds are an exemption for federal tax

Investing in government bonds is always low risk, the government always has a stable economy investors’ money remains safe

Government bonds always give you a regular income, you get interest once a year or every 6 months

It is especially beneficial for those who are retired and want regular income

Investing in municipal bonds is not just a financial benefit but also a social responsibility 

Funds are often collected to build roads, bridges, schools, hospitals, etc, Municipal bonds are a great tax saving investmen. Municipal bonds issued by local Government not by private companies. 

Municipal bonds are a debt instrument. Before buying municipal bonds, do your research well and also think about its risks. We hope you have definitely benefited from this article.