Municipal Bond

A municipal bond is a type of loan issued by local governments, such as cities or states, to raise funds for public projects like roads, schools, or hospitals. When you buy a municipal bond, you're lending money to the government entity, which promises to pay you back with interest over time. These bonds are often tax-exempt, meaning you don't pay federal income tax on the interest, making them a popular choice for investors seeking steady income with potential tax benefits. They are generally considered safe, especially when issued by financially stable municipalities.