The U.S. federal government issues its own bonds from the treasury and from several government firms. Those developing in less than one year are known as T-bills. Bonds that grow in one to ten years are T-notes, and those that take more than 10 years to mature are treasury bonds. In some cases, you do not need to pay state or local income taxes on the interest they make.

Munis finance things like medical facilities, schools, power plants, streets, office buildings, airports, bridges and the like. Municipalities typically release bonds when they require more money than they gather through taxes. The advantage about municipal bonds is that you don't have to pay federal earnings taxes on the interest they make.

While business bonds are a higher risk than government bonds, they can make a lot more cash. There's likewise a much larger selection of corporate bonds. The disadvantage is that you do need to pay federal income tax on the

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