About Different Types of Bonds

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A bond is a debt security that is issued by an authorized organization in which the lender is owed a debt. Learn about municipal bonds, school bonds and highway bonds with help from a licensed financial planner in this free video on the stock market and investing.

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Video Transcript

Hi, my name is Bill Rae. I'm with Alumni Financial Services. I've been in the finance in the business world for well over 20 years. And the question is, what about different types of bonds? I think we should have a general idea of what a bond is. A bond in the finance language is a debt security which is issued by an authorized organization in which the lender, you for instance, are owed a debt. In other words, we put our money in and we have an expectation of a certain amount of return and a certain amount of profit to be made on that. Now, when you talk about bonds, there are numerous types of bonds. And again I should tell you that bonds and any type of investment should be something you enter after careful research. You need to be talking with someone who is licensed and can give you expert advice. With that being said, there's all types of bonds. You'll hear the buzzwords out there, muni bonds, school bonds, highway bonds. For all intents and purposes, these are vehicles that say for instance a city that wants to build a road or a highway will go out and acquire money to do so and obligate themselves to pay back over a long period of time. They're great investment but like in any investment, you need to do your homework. You need to make sure that you're talking with a good seasoned adviser, one who is licensed to do so. With that being said, as always, I urge you to understand any contract you might be signing, any agreement you might be getting into. Know what you're expected to give, when you expect to get it back and what returns are expected of you. When do you need the money? There's so many questions that need to be answered and that you need to do your homework ahead of time. So as always, seek outside counsel, do your homework and enjoy the ride. My name is Bill Rae, I'm with Alumni Financial and as always, we're here to help you build wealth.

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