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Municipal bonds, or "munis", are bonds issued by non-United States government institutions. Munis might be issued by states, counties, cities, municipalities, or specific departments of a given local government such as a school district or recreation agency. Since the federal government cannot tax states or municipalities - interest income from municipal bonds is usually federal tax free. In most cases, debt issued by a state or locale is also non-taxable within that state or locale. For example, interest income from a bond issued by the State of Montana is generally not subject to Montana income tax. Many exceptions can and do apply, so please contact your SG Long & Company Financial Advisor for further details regarding the intricacies of any given municipal bond before investing.

General obligation, or "GO", municipal bonds are backed by the full faith and credit of the issuing entity - whether that be a state, city or some other government entity. Due to the fact that the bond is backed by the full taxing authority of the issuer - GOs are generally considered to posses a higher level of creditworthiness relative to revenue bonds (discussed below). All else held equal, due to the lower implied risk inherent in a General Obligation bond ~ they subsequently tend to offer more conservative returns than a revenue bond.

Revenue bonds are legally backed primarily by the revenue producing ability of the specific project or agency that the bond was used to finance. For example, if the city of Bozeman, MT voted to authorize a revenue bond issue to establish financing for a new swimming pool - the money generated by the resultant water park would be used to pay the interest on the bonds and ultimately repay them at maturity. Revenue bonds are not legally backed by the full taxing authority of the issuing municipality ~ and as such tend to return more than otherwise equivalent GOs.

Municipal bonds tend to be attractive investments for tax sensitive investors. For those in higher income brackets, the ability to generate income that is either partially or completely tax free presents a potentially attractive investment option. SG Long & Company has access to daily inventories of municipal bonds issued by states and municipalities spanning the United States. Whether you live in Montana or New York - your SG Long & Company Financial Advisor can offer you an array of options in the interest of generating tax advantaged income. Munis often come with a plethora of intricacies - so please contact your SG Long & Company Financial Advisor for a more detailed explanation of the advantages and risks of municipal bonds.