The U.S. federal government provides its own bonds from the treasury and from several federal government companies. Those maturing in less than one year are referred to as T-bills. Bonds that grow in one to 10 years are T-notes, and those that take more than ten years to mature are treasury bonds. In some cases, you don't need to pay state or local earnings taxes on the interest they earn.

Munis finance things like medical facilities, schools, power plants, streets, office structures, airports, bridges and so forth. Towns usually issue bonds when they require more cash than they gather through taxes. The good thing about community bonds is that you don't need to pay federal income taxes on the interest they make.

While corporate bonds are a greater danger than federal government bonds, they can earn a lot more cash. There's also a much bigger selection of corporate bonds. The disadvantage is that you do have to pay federal earnings

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