10 months ago
Last edited at 8:26AM on 6/21/2013
Treasuries are issued by the Federal Government and are solid investments, but pay very low interest. Municipals are issued by cities and towns to fund public improvements (roads, sewers). They are pretty safe, since the municipalities won't go away and can raise money through taxes, and their interest rates are a bit higher, but not as high as private stocks and bonds (which have a higher risk). Also, the earnings on most municipal bonds are tax free, which raises the net income from them. Both are sound investments, and municipals pay a higher return, so they are probably better.