After-tax returns of municipal bonds have outpaced inflation in 18 of the past 25 years and have outpaced CDs in 20 of the past 25 years.
Source: Bloomberg Services Limited.
Growth of $100,000 (1997–2021)
A $100,000 investment in 1997 would have had to grow to $176,111 in 2021 just to keep pace with inflation. An investment in municipal bonds would have returned nearly twice as much.
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Data is historical. Past performance is not a guarantee of future results. Chart assumes a maximum federal tax rate of 40.80% on 6-month CDs, as measured by the Bloomberg 6-month CD rates. Municipal bonds and inflation are represented by the Bloomberg Municipal Bond Index, an unmanaged index of long-term fixed-rate investment-grade tax-exempt bonds, and the Consumer Price Index, respectively. You cannot invest directly in an index. Unlike bonds, which incur more risk, certificates of deposit (CDs) offer a fixed rate of return, and the interest and principal on CDs are generally insured by the FDIC up to $250,000. While all bonds have risks, municipal bonds may have a higher level of credit risk compared with CDs.