Municipal bonds are an exclusive instrument of fixed income securities, an attractive implement to realize anybody's financial needs. Also known as, 'Munis' these securities are exempt, interest-paying debt securities. Municipal securities are issued by the government entities such as the state and the municipal government or by agencies or authorities established by those governments. These securities are issued with the objective of raising money to fund projects that are meant for public good such as, infrastructure, schools, libraries, non-profit hospitals and occasionally to provide for firms and individuals too.

Short-term Municipal bonds encompass several categories of municipal notes, the maturity varying from one to three years. Long-term Munis refer to tax-exempt commercial papers and demand obligations. The interest earned on Municipal Bonds is exempt from federal taxation and some are exempt from state and local income taxes too (within the state where they are issued). Those that are taxable are referred to as taxable Municipal bonds.

Municipal Bonds are appreciably beneficial investment tools. They make available a regular income-flow in the form of interest that is rewarded semi-annually. In addition, the principal amount is returned in full when the bond comes due. Investing in Municipal Securities is the safest bet as they have a default rate of less than half of one percent. Moreover, as already mentioned, the interest accrued is tax-free. Also, an investor has an extensive choice of issuers, types and tenure of municipal bonds to select from.

The Municipal Bond Market is the most populous as far as investments in fixed income securities are concerned. The numbers are staggering. For instance, current investments in municipal securities are worth an astounding $1.7 trillion, with a trading volume of $11 billion. This augmentation is mainly due to the appeal of tax advantages associated with Municipal bonds. Thus, Munis have an imperative position in every financial portfolio.