What Are Municipal Bonds?

Municipal bonds are debt obligations issued by states, cities, counties, and other governmental entities, which use the money to build schools, highways, hospitals, sewer systems, and many other projects for the public good.

Learn More: Municipal Bonds FAQ

Purchasing a Municipal Bond

When you purchase a municipal bond, you are lending money to a state or local government entity, which in turn promises to pay you a specified amount of interest (usually paid semiannually) and return the principal to you on a specific maturity date. Many bonds allow the issuer to call – or retire – all or a portion of the bonds at a premium, or at par, before maturity. When buying bonds, be sure to ask your investment representative about call provisions, and the difference between the yield to call and the yield to maturity.

Most municipal bonds offer federal, state – and often local – tax exemption on interest paid to residents of the state of issuance. *

Our Experienced Financial Experts Can Help

Carty & Company has a knowledgeable, experienced staff and trading desk available to evaluate and price all types of credits. We offer a wide range of choices to meet your investment objectives regarding investment quality, maturity, choice of the issuer, type of bond, and geographical location as well as the marketability in the event you must sell before maturity. In this heterogeneous market, tax-free bond quality ranges from non-rated “junk” bonds to triple “A”, government-guaranteed bonds.

More Information On Municipal Bonds

For additional information on municipal bond education and information on a specific municipal bond:

*If you are subject to the Alternative Minimum Tax (AMT), you may have to include interest income from certain municipal securities in calculating your income. There are different tax considerations when buying and selling bonds with gains and losses. Since tax laws frequently change, consult your tax lawyer or accountant for up-to-date advice.

Tax-Free Income

Because the federal government doesn’t tax the majority of state and municipal activities, municipal bonds often meet the requirements for tax exemption.  These may be a good option for investors who live in states with high income taxes.  In some cases, investments like these will see a higher return than other fixed investments.  However, federal and state tax-free income is achievable with municipal bonds.

Learn More About Municipal Bonds

Carty & Company has been helping clients meet their financial goals and make successful investments since 1970.  If you have questions about how municipal bonds might help you secure your financial future and generate tax-free income, our experienced financial professionals can provide the answers you need to make the best decisions for you and your family’s future.  Contact us today.

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