Municipal bonds have been called "the second safest investment" after U.S. Treasury bonds. The default rate for tax-exempt municipals, with $3.7 trillion of bonds outstanding, has a default rate (meaning you didn't get your money back) of less than one-half of a percent over 20 years. Those default rates are small, even after taking into account the 2013 bankruptcy of Detroit, and the current troubles of Puerto Rico's $70 billion of bonds in distress. But that doesn't mean that all municipal bonds are equal.
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