Block · one region of the page, as the scanner read it. It may hold a whole story, part of one, several, or an advertisement; stitching blocks into articles is the next step. Text is supplied OCR.
Page 14 · column 1 of 4 · from the scan, no model involved
What are municipal bonds?
Next time you're out driving, take a look around you. Notice the bridge you drive across, the maintenance work being done on the highway or the addition being built at the airport. State and local governments raise the funds to pay for projects like these by issuing bonds. Investors who buy the bonds are loaning the government money to pay for these projects. In turn, the issuer of the bonds promises to pay back the principal at maturity and a specified rate of interest throughout the life of the bond. The beauty of these bonds is that'the interest you earn is yours alone. Norte of it goes to Uncle Sam in the form of taxes.
Municipal bonds for
a high, long-term yield
In addition to their tax-free status, municipal bonds also offer an attractive return. Their interest rate is lower than the rate on most taxable investments, however, they usually offer a much better return after taxes. In fact, the interest rate on a taxable investment must be much higher than a taxfree investment in order to achieve the same return. The following chart* shows the taxable interest rates needed to equal tax-free yields at different tax brackets.
94.6%