California Municipal Bond - Can I make money using California muni bond funds?

Summary: This article describes the benefits of owning CA muni bonds and how to buy and sell these.

Related Articles: muni bond funds, Corporate bonds? Government bonds? Junk Bonds? AAA Bonds



California is the land of sunshine, Hollywood and the pursuit of dreams. For a state that is so large and diverse, it would be impossible for state financial officers to keep the state's finances in order if it wasn't for the California Municipal Bond.

The California Municipal Bond is sold to fund projects throughout the state, so an investment in this kind of Muni bond is actually another way to help the community. It is also a good way for investors to watch their money serve some good while growing, as the California Municipal Bond can gather interest for as long as forty years.

The method most often used to sell California Municipal Bonds is to sell them through a public auction or sale. The California treasury department announces the sale or purchase time of the Bonds, and investors simply bid on them or price to sell. For investors who are in search of the perfect interest rate, a california muni bond offer security as well as profitability, as their interest rate is guaranteed regardless of whether the rates are going up or down. Naturally if the rates are going up the value of the bond will increase as well, so the wise investor can increase his profit by watching the rates closely.

The buying and selling price for the CA municipal bond varies because of the bidding process, so it is wise for the budding investor to study the market carefully before accepting a bid. It is also important to understand the risks involved with buying a Municipal Bond. Find out if it is a general obligation issue or a specific revenue issue, as the specific issues rely on the profit of whatever is being constructed in order to repay the debt. In addition, either kind of California Municipal Bond can be called before its date of maturity, lessening the profitability of the investment.  

It is important also to realize that although the CA muni bond is usually fully tax-exempt at the federal, state and local level, some bonds may be taxable at one level or another.