In broad terms, the bond market can be divided into municipal bonds , mortgage-backed securities , corporate bonds , government bonds , U.S. agency securities and zero coupon bonds . To learn more about bond portfolios, Bond Market Outlook, bond basics or current yields, please read the Bond Portfolios and Strategies section. View A.G. Edwards' Municipal Bond Inventory and Upcoming New Issues too. Municipal Bonds Municipal bonds are the only investments available that provide federally tax-free income but may be subject to state, local and the alternative minimum tax. Other investments may be tax-deferred, but only municipal bonds are completely free from federal income taxes.
Municipal bonds are well-suited for investors who wish to reduce their tax burden.
Interest you earn from municipal bonds is typically paid every six months. Municipal bonds are issued by state and local governments, school districts, hospitals, and other public entities to raise money for community projects and services. Money raised through municipal bond issues can be used to build streets, water and sewer systems, hospitals, schools, jails, hydroelectric dams, airports, parks, and other long-term projects. When you purchase a municipal bond, you actually make a loan to the issuer. In return for your loan, the issuer promises to pay you interest at a predetermined rate while you hold the bond and to return your principal at maturity.