TITLE:
The Layman’s Guide to Bonds and Municipal Bonds
AUTHORS:
Daniel J. Ramos
KEYWORDS:
Municipal Bonds, Debt Financing, Rating Bonds
JOURNAL NAME:
Journal of Financial Risk Management,
Vol.12 No.1,
March
27,
2023
ABSTRACT: According to the Wall Street Journal (Pellajaro, 2021),
“Investors in search of higher returns and lower taxes are scooping up debt
sold by state and local governments…” Municipal bonds (munis) total 39 billion
dollars in 2021. Your investment portfolio should contain a basket of
investments that include stocks and bonds. These are known as equity and fixed
income instruments. A well-diversified portfolio minimizes your risk level and
maximizes your growth potential over time. Such a portfolio should include the
added protection of municipal bonds. That protection comes in the form of
federal (and potentially state) tax exemptions. Municipal bonds offer fixed
income opportunities that generate growth without federal tax burdens. This
article aims to educate the layman on bonds and municipal bonds; specifically,
how they work, how they are priced and how to add them to an investment and
retirement portfolio.