Risky Munis?

Physician's Money Digest, September30 2003, Volume 10, Issue 18

General Obligation (GO) municipalbonds, which are backed by the taxingpower of the government entity thatissues them, are generally consideredrisk-free. But there are caveats. Californianswho invest in state-issued munisto avoid state taxes may want to considerputting their money into out-of-stateissues in view of the Golden State's fiscalcrisis and political turmoil, some bondmavens say. In fact, investors often gethung up on avoiding state taxes when amore diversified muni-bond portfoliomight do better in terms of netreturn. Investors who live in states thathave no income tax obviously don't needto worry about state tax issues andshould focus on building a portfolio ofmunis from several states. Before you putup any money, get the lowdown onmunis from the Bond Market Association(www.investinginbonds.com).