How to Buy Muni Bonds Safely

Despite some recent defaults, tax-free bonds are still generally reliable investments.

In today’s low-yield world, municipal bonds offer some comfort to income-starved investors, especially when compared with other historically trustworthy investments. As the accompanying chart shows, a triple-A-rated tax-free bond maturing in ten years yields 1.8%. For an investor in the 35% federal tax bracket, that’s equivalent to 2.8% from a taxable bond. By contrast, a ten-year Treasury bond pays a puny 1.5%.

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Kathy Kristof
Contributing Editor, Kiplinger's Personal Finance
Kristof, editor of, is an award-winning financial journalist, who writes regularly for Kiplinger's Personal Finance and CBS MoneyWatch. She's the author of Investing 101, Taming the Tuition Tiger and Kathy Kristof's Complete Book of Dollars and Sense. But perhaps her biggest claim to fame is that she was once a Jeopardy question: Kathy Kristof replaced what famous personal finance columnist, who died in 1991? Answer: Sylvia Porter.