The U.S. government provides its own bonds from the treasury and from several federal government firms. Those developing in less than one year are referred to as T-bills. Bonds that develop in one to ten years are T-notes, and those that take more than ten years to develop are treasury bonds. In many cases, you do not need to pay state or local income taxes on the interest they make.

Munis financing things like hospitals, schools, power plants, streets, office buildings, airports, bridges and the like. Municipalities usually provide bonds when they need more cash than they collect through taxes. The good idea about local bonds is that you do not need to pay federal earnings taxes on the interest they make.

While business bonds are a greater threat than federal government bonds, they can earn a lot more money. There's also a much bigger choice of business bonds. The disadvantage is that you do have to pay federal income tax on the

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