19th Nov 2009 by Daniel Cross, ChFC
Investing in municipal bonds, or Muni-bonds as they're more commonly called, has a very distinct advantage that virtually no other investment has. Interest income on them is free of federal, state, and even local taxation depending on the type of bond purchased. In order to get a realistic rate of return than you can expect to get, you'll need to know your own tax bracket. Then you can calculate it like so: municipal interest rate = corporate bond you are comparing * 100% - your tax bracket. That will tell you that the muni-bonds rate that you calculate is equal to the corporate bond rate that you are comparing it with.
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