What is the difference between a municipal bond and a government bond

What is the difference between a municipal bond and a government bond Introduction: The Bond Market and Its Diversity Hello everyone, and welcome to today's video. When it comes to investing, the bond market offers a wide range of opportunities. Among them, municipal bonds and government bonds stand out. While both fall under the fixed income category, they have distinct characteristics. Today, we'll explore these differences, helping you understand which might be the right fit for your investment portfolio. Let's get started! Defining Municipal Bonds: Local Projects and Tax Benefits Municipal bonds, often referred to as 'munis,' are debt securities issued by local governments or their agencies. These entities could be cities, counties, or even school districts. The primary purpose of issuing munis is to raise funds for public projects such as building schools, hospitals, or infrastructure. What sets municipal bonds apart is their tax-exempt status. In many cases, the interest earned from these bonds is not subject to federal income tax. This tax advantage makes munis an attractive option for investors in higher tax brackets. Understanding Government Bonds: Backed by the Full Faith and Credit