Missource Municipal Bonds
Municipal Bonds
   Missouri Municipal Bonds | Tax Free Bonds

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Types of Missouri Municipal Bonds

Municipal bonds are attractive investment options for many people. These bonds are also called munis. They are interest-earning debt obligations issued by government entities such as states, cities or counties. They are use to raise funds for constructing roads, schools, hospitals and other projects for the welfare of the people.

There are many benefits of munis. They are a tax-free way of improving your income. The interests you earn from investing on such bonds are exempted from federal income tax. They may also be exempted from state taxes. This tax advantage makes municipal bonds appealing to many people. Because they are issued by government entities, there is little or no risk involved. These bonds have a good track record of credit worthiness. Another benefit of such bonds is their predictability. Most bonds pay the interest semi-annually while the principal is given back to the investor when the bonds reach their maturity date. Aside from these, investors have many options depending on factors such as investment quality, issuer, and maturity.

The only real downside of municipal bonds is that they have low interest rate, as compared to other types of investment. Also, another complaint with such bonds is that they could be very difficult to cash in if the issuing municipality is small or a rural government.

There are two types of municipal bonds: the revenue bonds and general obligation bonds. Revenue bonds are issued to finance several infrastructure projects. These bonds earn interest through incomes generated by such projects. Meanwhile, general obligation bonds are issued to immediately raise money to cover expenses. It is backed or supported by the taxing power of the issuing municipality.

There are several municipal bonds in the state of Missouri. One kind is the Recovery Zone Bonds. Such bonds were created under the American Economic Recovery and Reinvestment Act of 2009. These bonds are used to support certain applications and properties which are under the designated recovery zones. The two types of Recovery Zone Bonds are the Recovery Zone Facility Bonds and Recovery Zone Economic Development Bonds.

The Recovery Zone Facility Bonds are used to financially support new capital improvement projects which are used or owned by businesses located in the designated recovery zone. Meanwhile, the Recovery Zone Economic Development Bonds are utilized by political subdivisions to support capital acquisitions as well as capital improvements.
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