Nobody can afford to pay for a new road in cash. It takes financing, like issuing a bond: a loan given to a corporation or government, paid back to investors with interest during a specific timeframe.
Think about a mortgage – you get a loan. You pay it off over time with interest, and your interest payments are higher at first because the balance you owe is still high. As the amount you owe decreases, do does the interest you pay. Bonds work the same way.
Municipal bonds (municipality = city, but cities, counties and states all issue bonds) are used to pay for city projects. Think new schools, road work, and water treatment facilities.
Who’s loaning the money? When a government needs to fund a big project, they issue bonds to investors. Anyone can invest in municipal bonds (but it’s usually your city’s high-profile residents) – you can buy them individually from bond dealers, banks, or brokerage firms, or invest in a mutual fund that invests in bonds.
Then you get interest (called coupons) + payments back. 💸
Investing in municipal bonds is a pretty safe bet – the City of Greenville has an AAA rating from Moody’s (the highest possible, only 7% of rated cities), which basically means they have awesome credit.
Bonds are funding major projects all over Greenville – they’re investments in our city + investments for you, too.
