Municipal Bond Prices and Rates

Municipal bonds are a unique investment choice. They generally offer equivalent coupon rates to equivalent risky bonds. Compared to other bonds, they offer a tax sheltering opportunity, making them a higher-paying bond, generally speaking.

Municipal bond prices can be found in "Munifacts" under "The Bond Buyer" published every business day. "The Bond Buyer" has four compiled indices as well as daily news pertaining to the municipal bond market.

The overall bond market doesn't offer the same tax-sheltered incentive that the municipal bond market offers. That's because they are considered regional government issued securities. Among municipal bonds, there are two major categories: the revenue bond and the general obligation (GO) bonds. There are general differences between the two; however, both will payer higher rates than equivalent risk bonds in the broader market. The features and rates of the bonds depend on the state of issuance. Also, the higher tax bracket an investor is in, the better the incentive to invest in municipal bonds.

It is important to know that this market is not without its risks. An investor should be aware of different investment options rather than traditional ways to invest, due to the ever-large universe of products to invest in.

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