What are Municipal Bonds or Munis?


What is a municipal bond?

Municipal bonds are debt securities issued by cities, states, counties, or other local governments. They are also commonly known as Munis, and could be issued for 1 to 10 years.

Why is a municipal bond issued?

These bonds are issued to raise funds for public projects like highways, schools, sports arenas, hospitals, etc.

How can I buy munis?

You can buy munis through your financial advisor, bank, or directly from the issuer. You can also invest in munis indirectly through a bond fund.

[This is an affiliate link: at no additional cost to you, we will earn a commission if you click & make a purchase]

Why should I invest in municipal bonds – what are the advantages?

Their biggest advantage is that the interest you earn from these bonds is usually tax-free. So these are a great investment for investors in a higher income-tax bracket. Munis are also considered a very low risk investment.

Are there any disadvantages of municipal bonds?

Because the interest is tax-free, the rate of interest paid by munis is usually lower than that of taxable bonds. Also, municipal bonds are often held till maturity, so the market to trade munis is not very active – making them less liquid.

Municipal Bonds - Munis
  • Save
You may also like:  Infographic: What are Stocks?
Easy Peasy Finance is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.

Leave a Comment

Start Now - It's Completely Free!

No spam guarantee - You can unsubscribe at any time.

Become Financially Successful

Get our free email course, which includes:

Copy link
Powered by Social Snap