Tax exemption is an important feature of these bonds; perhaps that is why they are also called the tax free bonds or the government bonds.
Municipal bonds or the high yield tax free bonds are not quite old in the bonds market. They were first launched and floated in the market around 50 years ago. The reason of floating the high yield tax free bonds in the market was to persuade with the process of completing public welfare projects and to provide the common people with a chance to earn something without facing any risk. However these bonds played a great roll in making the lives of the people easy by providing them with roads, schools, colleges, and universities.
These bonds can generally be divided into two types. The first type is known as the general obligation bonds, while the second type is well known as the revenue bonds. People that prefer great security go about investing into the general obligation bonds, while the people that like earning high and that want to invest their money for longer period of time prefer investing into the revenue bonds. The main difference between both of these types of the high yield tax free bonds is the way money earned from them is used and the time period for which they are issued.
The general obligation bonds are floated to gather money that can be used in the upkeep and maintenance of the cities and towns. They are usually floated for five years. The interest rate upon these bonds is paid to the investors as soon as it becomes due. On the contrary the money that is accumulated by selling the revenue bonds is invested into the construction of large projects. They are utilized to build roads, bridges, dams, and other projects that are needed by the state or town.
tax free bonds, as the name elaborates, are free from the taxes of the federal government. If you are looking for some sector that would provide you greater returns, yet that would not require you to face greater risk, the tax free bonds are best choice for you.
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