# What is a municipal fund? **URL:** \ **Category:** Factual Questions\ **Created:** [December 11, 2006, 2:40pm UTC](https://boards.straightdope.com/t/what-is-a-municipal-fund/383680 "2006-12-11T14:40:26Z")\ **Posts on this page:** 9\ **Page:** 1
**Author:** ![Bosda\_Di\_Chi\_of\_Tricor](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bosda_di_chi_of_tricor/32/16845_2.png) [@Bosda\_Di\_Chi\_of\_Tricor](https://boards.straightdope.com/u/Bosda_Di_Chi_of_Tricor)\ **Post date:** [December 11, 2006, 2:40pm UTC](https://boards.straightdope.com/t/what-is-a-municipal-fund/383680/1 "2006-12-11T14:40:26Z")
What are municipal funds? How do they work? Ae they for (very) small investors? ---
**Author:** ![ultrafilter](https://avatars.discourse-cdn.com/v4/letter/u/3d9bf3/32.png) [@ultrafilter](https://boards.straightdope.com/u/ultrafilter)\ **Post date:** [December 11, 2006, 2:57pm UTC](https://boards.straightdope.com/t/what-is-a-municipal-fund/383680/2 "2006-12-11T14:57:54Z")
See [here](https://www.oppenheimerfunds.com/investors/education/municipalBondFunds.jhtml) for a short overview. In brief, municipal funds let you invest in local government projects, and may offer tax-free income in return. ---
**Author:** ![Bosda\_Di\_Chi\_of\_Tricor](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bosda_di_chi_of_tricor/32/16845_2.png) [@Bosda\_Di\_Chi\_of\_Tricor](https://boards.straightdope.com/u/Bosda_Di_Chi_of_Tricor)\ **Post date:** [December 11, 2006, 3:36pm UTC](https://boards.straightdope.com/t/what-is-a-municipal-fund/383680/3 "2006-12-11T15:36:56Z")
So, is this something a guy who makes in the low 20s/ early 40’s agebracket should look at for retirement? ---
**Author:** ![Freddy\_the\_Pig](https://avatars.discourse-cdn.com/v4/letter/f/a587f6/32.png) [@Freddy\_the\_Pig](https://boards.straightdope.com/u/Freddy_the_Pig)\ **Post date:** [December 11, 2006, 4:57pm UTC](https://boards.straightdope.com/t/what-is-a-municipal-fund/383680/4 "2006-12-11T16:57:32Z")
[QUOTE=Bosda Di’Chi of Tricor] So, is this something a guy who makes in the low 20s/ early 40’s agebracket should look at for retirement? [/QUOTE] 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_. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [December 11, 2006, 8:51pm UTC](https://boards.straightdope.com/t/what-is-a-municipal-fund/383680/5 "2006-12-11T20:51:59Z")
[QUOTE=Freddy the Pig] In general, the person attracted to munis would be somebody who’s well off and already retired–somebody who needs tax-free income, _now_. [/QUOTE] 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. ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [December 11, 2006, 9:14pm UTC](https://boards.straightdope.com/t/what-is-a-municipal-fund/383680/6 "2006-12-11T21:14:01Z")
Here are a few discussions of munis as investments: [Risks of Investing in Bonds](http://www.investinginbonds.com/learnmore.asp?catid=3&id=383) [Municipal bonds up to bat Strong demand defies rising rates, but supply is tight](http://www.marketwatch.com/News/Story/FzJ0q00zL7mT3N2r9wC8ch7?siteid=google&dist=morenews) [How to use bonds to cut investment risk](http://articles.moneycentral.msn.com/Investing/InvestingForIncome/HowToUseBondsToCutInvestmentRisk.aspx) [http://www.findarticles.com/p/articles/mi\_m1365/is\_7\_29/ai\_54195609](http://www.findarticles.com/p/articles/mi_m1365/is_7_29/ai_54195609) [Packing a punch - municipal bonds as an investment - Personal Finance](http://findarticles.com/p/articles/mi_m0DTI/is_n4_v26/ai_20484738) ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [December 11, 2006, 9:17pm UTC](https://boards.straightdope.com/t/what-is-a-municipal-fund/383680/7 "2006-12-11T21:17:47Z")
On individual bonds vs. bond funds: [Businessweek - Bloomberg](http://www.businessweek.com/the_thread/wellspent/archives/2005/04/the_case_for_mu.html) ---
**Author:** ![dalej42](https://avatars.discourse-cdn.com/v4/letter/d/67e7ee/32.png) [@dalej42](https://boards.straightdope.com/u/dalej42)\ **Post date:** [December 11, 2006, 9:19pm UTC](https://boards.straightdope.com/t/what-is-a-municipal-fund/383680/8 "2006-12-11T21:19:02Z")
[Here](http://personal.fidelity.com/products/fixedincome/fitaxabletax.shtml) is a good website about municipal bonds and if they’re a good choice for an investor. [Investing in bonds](http://www.investinginbonds.com/) has more information than you’d ever want to know about bonds as well. ---
**Author:** ![jimmmy](https://avatars.discourse-cdn.com/v4/letter/j/73ab20/32.png) [@jimmmy](https://boards.straightdope.com/u/jimmmy)\ **Post date:** [December 11, 2006, 11:37pm UTC](https://boards.straightdope.com/t/what-is-a-municipal-fund/383680/9 "2006-12-11T23:37:37Z")
[QUOTE=Bosda Di’Chi of Tricor] So, is this something a guy who makes in the low 20s/ early 40’s agebracket should look at for retirement? [/QUOTE] 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 )