Summary of General Obligation Bonds

That school, streetlight, or public park in your neighborhood was probably built with the help of a general obligation bond issue. Sold to raise funds for works that benefit the entire community, GO bonds are backed by the full faith and credit of the municipality, which allows the state or local government to raise taxes to help ensure that the bonds are paid. While other investments may pay higher interest rates, GO bonds typically offer the advantage of solid security, based on the full faith and credit of the municipality, and many offer tax-free returns as well. Investors can participate in diversified portfolios of GO bonds with a relatively small investment by buying shares in mutual funds and unit investment trusts based on these securities.