"A bond is a debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate," according to Investopedia. The corporate or government entity uses the bond-sale proceeds to finance company expansion, for example, or civic projects. If you’re interested in financing projects and activities in California, you can buy California bonds.
Open a brokerage account with an investment company that has the ability to purchase California bonds. You cannot buy California bonds directly from the state. If you have a brokerage account, then make sure that the financial firm has access to buying California bonds.
Learn about the bonds or notes for sale. Visit the California state treasurer website to see what bond issues are for sale. California bonds are offered only through an Official Statement. Download the Preliminary Official Statement to learn the details of the bonds. You can learn about credit ratings, maturity dates and the types of projects the bond issuance is funding.
Discuss the bonds with your broker. After educating yourself on the California bonds you’re interested in buying, call your broker and discuss the options with him. Make sure your account is eligible to buy the California bonds you’re interested in and see what the broker thinks about the quality of each bond. Also, discuss the process of buying the bonds during the early order period so you’ll know when and how to place your order.
Place your bond order. When you’re ready to buy the California bonds, contact your broker and place your order.
Tips
Since each brokerage firm has different account-opening requirements and time frames, open your account before the bond you want to buy goes on sale to ensure there isn’t a delay in making a purchase.
References
- California State Treasurer: How to Buy California Bonds
- Bonds | Investor.gov
- Federal Reserve Bank of San Francisco. "What Makes Treasury Bill Rates Rise and Fall? What Effect Does the Economy Have on T-Bill Rates?" Accessed April 23, 2020.
- TreasuryDirect. "Treasury Notes In Depth." Accessed April 23, 2020.
- TreasuryDirect. "Treasury Inflation-Protected Securities (TIPS)." Accessed April 23, 2020.
- U.S. Securities and Exchange Commission. "Municipal Bonds." Accessed April 23, 2020.
- U.S. Securities and Exchange Commission. "Corporate Bonds." Accessed April 23, 2020.
- U.S. Securities and Exchange Commission. "What Are High-Yield Corporate Bonds?" Accessed April 23, 2020.
- California State Treasurer. "Bond Concepts and Overview," Page 8. Accessed April 23, 2020.
- TreasuryDirect. "TreasuryDirect." Accessed April 23, 2020.
- U.S Securities and Exchange Commission. "Bonds." Accessed April 23, 2020.
- PIMCO. "Everything You Need to Know About Bonds." Accessed April 23, 2020.
- The Vanguard Group. "What Is a Bond? A Way to Get Income & Stability." Accessed April 23, 2020.
- Ally Bank. "Bond Mutual Funds." Accessed April 23, 2020.
- U.S. Securities and Exchange Commission. "Risk and Return." Accessed April 23, 2020.
- Standard & Poor's Financial Services. "S&P Global Ratings Definitions." Accessed April 23, 2020.
- Fidelity. "Bond Ratings." Accessed April 28, 2020.
- U.S. Securities and Exchange Commission. "Investor Bulletin Interest Rate Risk—When Interest Rates Go up, Prices of Fixed-Rate Bonds Fall," Pages 1-3. Accessed April 23, 2020.
- BlackRock. "How to Invest in Bonds." Accessed April 23, 2020.
- Fidelity Investments. "What Is a Yield Curve?" Accessed April 23, 2020.
- Financial Industry Regulatory Authority. "Bonds and Interest Rates." Accessed April 23, 2020.
- Rocket Mortgage. "How Bonds Affect Mortgage Rates." Accessed April 23, 2020
Tips
- Since each brokerage firm has different account-opening requirements and time frames, open your account before the bond you want to buy goes on sale to ensure there isn't a delay in making a purchase.
Writer Bio
Kristie Lorette started writing professionally in 1996. She earned her Bachelor of Science degree in marketing and multinational business from Florida State University and a Master of Business Administration from Nova Southeastern University. Her work has appeared online at Bill Savings, Money Smart Life and Mortgage Loan.