How to buy municipal bonds is a multi billon dollar question which most of us confront at some point of time. In the United States itself there are close to 50,000 states as well as local entities that issue multiple types of multiple bonds. The prices as well as the interest rates of these bonds can be tracked by going through the financial section in any of the leading papers in the United States.
Normally they can be purchased through an investment broker and some brokers specialise in the purchase of such bonds. It needs to be kept in mind that any stockbroker can make the purchases as well. When one buys a municipal bond through a broker they have to pay a transaction price between 0.5 % to 3 % of the bond price. How to buy municipal bonds is not at all an easy task and involves lot of research and planning. If one things could be put in right perspective it is a loan and the municipality undertakes to pay back the loan according to the terms as well as conditions of the loan.
One of the most important things which one has to consider while buying a municipal bond is the rating of the bond. Generally if the rating is above BB it is considered as a safe form of investment or otherwise it is a speculative form of investment. On the other side of things bond with a C rating may already be in the default list. In a way they are very much part of the investment portfolio and the age of an individual determines how much they want to own. In a way it also determines the risk they want to take. The younger lot tend to invest in high yielding securities such as stocks. To consider another point of view tax free investment bonds will be a major part of your investment portfolio as one tends to grow old.
If one is already into the investment of a mutual fund, then they might be quiet aware on how to buy municipal bonds. The mutual fund managers adopt a combination of low risk municipal bonds in a combination of high risk investment portfolios to even out things on the investment front. One could adopt another type of strategy in which they invest in special type of funds that invest or buy only municipal bonds. In recent times one could adopt a bonding strategy in which one buys bonds of different companies which have different types of maturity dates at the helm. When a bond matures you invest in the helm on the second.