According to the Wall Street Journal (Pellajaro, 2021), “Investors in search of higher returns and lower taxes are scooping up debt sold by state and local governments…” Municipal bonds (munis) total 39 billion dollars in 2021. Your investment portfolio should contain a basket of investments that include stocks and bonds. These are known as equity and fixed income instruments. A well-diversified portfolio minimizes your risk level and maximizes your growth potential over time. Such a portfolio should include the added protection of municipal bonds. That protection comes in the form of federal (and potentially state) tax exemptions. Municipal bonds offer fixed income opportunities that generate growth without federal tax burdens. This article aims to educate the layman on bonds and municipal bonds; specifically, how they work, how they are priced and how to add them to an investment and retirement portfolio.
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