How Do Municipal Bonds Work?

Video Transcript

"Hi. My name is Bill Rae. I'm with Alumni Financial Services. I've been in the business and financial world for well over twenty years. Your question is, how do municipal bonds work? That's an excellent question. First of all, let's get an understanding of what a bond is. Well, a bond in the finance world, is a debt security in which an authorized issuer borrows money and owes a debt. And they agree to pay that back in a certain time with interest. That's a bond. "Muni" bonds are liquid, meaning that they can be sold at any time very much like a stock. The price you get when you sell the "muni" bond of course will depend upon the market at that time. It could be up. It could be down, very much like stocks. Now, I'm not advocating any stock or bond advice, when to buy or sell, or to solicit. But I will tell you that "munis" are a good vehicle in which you can put your money. What I recommend, as always, is you need to talk with a licensed professional adviser. You also need to understand any agreements that you're about to get into. Know what's required of you. Know when and how you should get your money back and your returns on your money, if any. Once again, my name is Bill Rae. I'm with Alumni Financial Services and we're here to help you build wealth."