: Require a brokerage account. They often have high minimums (typically per bond) and require significant research.
: The primary draw is that interest is typically exempt from federal income tax. buying municipal bonds for dummies
: They are generally considered lower risk than corporate bonds, with historically low default rates. : Require a brokerage account
: If you live in the state that issued the bond, the interest may also be exempt from state and local taxes. : They are generally considered lower risk than
: Munis are best held in taxable brokerage accounts. Holding them in tax-advantaged accounts like a 401(k) or IRA wastes their primary tax benefit. Introduction to Municipal Bonds: Tax-Free Income and Risks
: They provide a predictable, fixed stream of income, usually paid out twice a year. Common Types of Municipal Bonds
: An issuer may "call" or repay the bond early, typically when interest rates drop. This forces you to reinvest your money at a lower rate.
