What do I need to know about municipal bonds? Municipal bonds, or "munis," are debt securities issued by state and local governments to finance public projects and day-to-day operations. Here are key points to understand about municipal bonds: Purpose: They fund capital projects such as schools, highways, and sewer systems. Types: General Obligation (GO) bonds: Backed by the issuer's taxing power. Revenue bonds: Secured by income from specific projects, such as toll roads. Interest payments: Bondholders receive regular interest payments, usually semiannually. Tax benefits: Interest is often exempt from federal income tax and sometimes from state and local taxes. Maturity: Can be short-term (1-3 years) or long-term (over a decade). Risk: Generally lower default risk compared to corporate bonds, but revenue bonds may be more vulnerable to economic changes. Market size: As of Q3 2024, the municipal bond...
Investment and economic observations by N. Russell Wayne, CFP, MBA. Mr. Wayne is the president of Sound Asset Management, inc. and former Managing Editor of The Value Line Investment Survey.