Municipal bonds are long-term, interest-bearing IOUs.
Municipal bonds are long-term, interest-bearing IOUs. Average annual total returns include changes in share price and reinvestment of dividends and capital gains. Funds have had several good years and investors should be prepared for a stock market correction, perhaps a major one. When you invest in a muni, you're making a loan to the issuer.
The proceeds from muni bonds bankroll state debt, school systems, airports, toll roads, water authorities and subsidized housing projects. That, in turn, means states and cities will have more money for paying bills. Quarter-end returns include the effect of any applicable recurring and non-recurring fees including short-term trading fees or redemption fees. Read more about after-tax returns and Morningstar definitions. If the economy continues to improve, the likelihood of default will fall even more. States with poor credit ratings have to pay more in interest, just as people with bad credit do. For investors, however, there's gold in them thar bills. Quarter-End returns include all applicable recurring and non-recurring fees including short-term trading or redemption fees and charges, if any.