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Tax-Free Bond Fund When a mutual fund invests in municipal bonds, it is eligible for a tax break. When this occurs, it is called a tax-free bond fund and it is becoming increasingly popular because not paying tax can increase the overall return on the bond. Most of these bonds are used to finance public projects, such as the creation of schools and the repair of roads and they usually pay a monthly dividend, so you can expect a very fast partial return on your investment. Shares are also very easy to redeem because these bonds are highly marketable to others because of this easy return. |
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