Let us break this down 

1. You give some money to invest in municipal bonds

2. This money is invested in local government projects 

3. Like the train system in Santa Monica 

4. Some time passes 

5. You receive yield payments back from your bond 

6. You don’t have to pay taxes on your yield

7. #moneyface

8. This all equals a municipal bonds

Now let us piece this together; first you give some money to invest in something called a “municipal bond”. Now, this money is invested in building local infrastructure; like toll roads and the train station in Santa Monica for example, yay city to beach! Now some time passes and you receive a yield payment from your bond, and the best part is you do not have to pay taxes on your yield because it was invested in government projects. #moneyface

Municipal Bonds 101

• Debt Securities (Like a loan, defined terms and date of payments) 

• Used to build local highways, schools, hospitals, and parks (Leslie Knope would approve) 

• Majority of yields are given tax-free!

Types of Municipal Bonds

• General Obligation: Issued by the government and not backed by a specific revenue source, like a toll road. 

• Revenue: the yield of the bond is dependent on revenue collected from the project, like a toll road.

Risk 

• Default Risk (very low)

• Interest rate risk (like most bonds) 

How to Invest

• There are mutual funds that invest strictly in municipal bonds 

• Consult with your financial adviser or reach out to us here

Overall municipal bonds are a great way to invest and are often very appealing to investors in a higher tax bracket. It is also a great way to get some solid yields without taking on too much risk. So let us help Leslie Knope build that park and buy some Pawnee municipal bonds! #parksandrec

Note: It is best to work with a professional to understand how this investment works specifically to you and by no means is this a recommendation to buy municipal bonds.