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

Munis finance things like health centers, schools, power plants, streets, office structures, airports, bridges and the like. Towns generally release bonds when they need more money than they collect through taxes. The advantage about local bonds is that you don't have to pay federal income taxes on the interest they earn.

While business bonds are a higher risk than federal government bonds, they can earn a lot more cash. There's also a much larger choice of corporate bonds. The disadvantage is that you do need to pay federal earnings tax on the interest they earn. Particularly

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