What is a municipal bond?
Municipal bonds are debt securities issued by cities, states, counties, or other local governments. They are also commonly known as Munis, and could be issued for 1 to 10 years.
Why is a municipal bond issued?
These bonds are issued to raise funds for public projects like highways, schools, sports arenas, hospitals, etc.
How can I buy munis?
You can buy munis through your financial advisor, bank, or directly from the issuer. You can also invest in munis indirectly through a bond fund.
Why should I invest in municipal bonds – what are the advantages?
Their biggest advantage is that the interest you earn from these bonds is usually tax-free. So these are a great investment for investors in a higher income-tax bracket. Munis are also considered a very low risk investment.
Are there any disadvantages of municipal bonds?
Because the interest is tax-free, the rate of interest paid by munis is usually lower than that of taxable bonds. Also, municipal bonds are often held till maturity, so the market to trade munis is not very active – making them less liquid.
Podcast: What are Municipal Bonds or Munis
Fun, informative and concise episodes by a 10-year old, breaking down complex financial concepts in a way that kids and beginners can understand. Episodes cover personal finance topics like saving, investing, banking, credit cards, insurance, real estate, mortgage, retirement planning, 401k, stocks, bonds, income tax, and more, and are in the form of a conversation between a cowboy (a finance novice) and his friend, a stock broker. Making finance your friend, only at Easy Peasy Finance.
A little bit about me: I have been fascinated with the world of personal finance since I was 6! I love to read personal finance books, and keep myself updated on the latest by reading various personal finance magazines. My friends often ask me questions about finance because they find it complex and intimidating. That’s what inspired me to start my YouTube channel called Easy Peasy Finance when I was 8, and this podcast 2 years later.
All you need to know about Municipal Bonds, popularly known as Munis: What is a municipal bond or a muni, Why is a municipal bond issued, How can you buy munis, Why should you invest in municipal bonds – what are the advantages of munis, What are the disadvantages of municipal bonds, and more.
Show notes and transcript at: https://www.easypeasyfinance.com/what-are-municipal-bonds-or-munis/