Bonds can help diversify your investment portfolio. Interest payments from bonds can act as a hedge against the relative volatility of stocks or other investments. Those interest payments also can provide you with a steady stream of income.

Municipal bonds (munis) are issued by states, counties or municipalities and are free from federal taxation (with some exceptions). Some may be completely tax free if you are a resident of the state, county or municipality of issuance. Though municipal bonds generally offer lower interest payments compared with taxable bonds, their overall return may be higher because of their tax-reduced (or tax-free) status.

There are many factors to be considered when purchasing municipal bonds. Your individual tax rate, the credit quality of the bond and the maturity of the bond are just a few. At David P. Gilliam & Associates, we can help you look at the factors and determine what suits your investment needs.

*Municipal bonds are subject to availability and change in price. They are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.