Learn how to select the type of Municipals that best suit your personal circumstances.
With everything there is to know about municipal bonds, the single most important thing for investors to know is how to select the bonds that best suit their personal circumstances and investment goals. That may seem like an exaggeration, but it's not - and here is why. Almost without exception, investors who do not take the time to fully understand the many different types of municipals available to them, simply buy the highest yields they can find - assuming they are satisfied with the rating. And that has often proven to be one of the most costly mistakes a bond buyer can make. Because getting the highest yields means long term bonds or one of the long term bond funds, and those are precisely the tax-free investments that also put your principal at the greatest risk - regardless of the quality.
To be a successful investor you must preserve your wealth as well as enhance it. So what you really want is not just the highest yield but rather the best combination of yield, safety and liquidity - considering your personal circumstances. And to get that you must learn to establish investment goals that suit your personal profile and buy the bonds that best serve those goals. That's the only way professional investors buy.