What are municipal funds?
How do they work?
Ae they for (very) small investors?
See here for a short overview. In brief, municipal funds let you invest in local government projects, and may offer tax-free income in return.
So, is this something a guy who makes in the low 20s/ early 40’s agebracket should look at for retirement?
One hesitates to give investment advice over a message board, but probably not. The primary attraction of munis is that they’re tax-free, but there are other vehicles to achieve tax-free (or at least tax-deferred) retirement savings growth. Plus bonds in general are fixed-income securities and don’t offer the long-term capital gain potential of equities.
In general, the person attracted to munis would be somebody who’s well off and already retired–somebody who needs tax-free income, now.
Or someone who is very risk and tax adverse. My father invests only in them, and except for 2001-2002, my investments have done a lot better. He also doesn’t have enough income for the tax-free nature of the bonds to make much difference. I suspect he is not all that uncommon for a holder of municipal bonds who is not rich.
Here are a few discussions of munis as investments:
Municipal bonds up to bat
Strong demand defies rising rates, but supply is tight
How to use bonds to cut investment risk
http://www.findarticles.com/p/articles/mi_m1365/is_7_29/ai_54195609
Packing a punch - municipal bonds as an investment - Personal Finance
On individual bonds vs. bond funds: Businessweek - Bloomberg
Here is a good website about municipal bonds and if they’re a good choice for an investor. Investing in bonds has more information than you’d ever want to know about bonds as well.
Certainly not as your only form of Investing or for your only means of retirement. Beyond that I wouldn’t say in a GQ way.
IMHO it is conceivable if you had a good 401K, a Roth IRA and a balanced portfolio otherwise and you wanted something low risk (which for you, as presented, I think is more important than the Tax Free nature) then maybe it could be a vehicle for you.
Read these great links and decide (and I agree that taking Financial advice from a MB isn’t wise - and I know you are just curious and not really seeking “advice“ - but others who read the thread may not )