Older Taxpayers Collected 77% of Muni Interest in 2007

Municipal Bonds have always been portrayed as an investment vehicle for older investors - turns out that's true. Bloomberg is reporting that 77% of the tax-exempt income from municipal bonds went to taxpayers 55 and older. Conversely, taxpayers between the ages of 18-35, who constitute the largest group, receives only 1.52% of all tax-exempt interest.

None of this is surprising. Younger taxpayers have less to invest and when they do invest are pushed into equity-based mutual funds. That's despite the fact that studies show that over time, bonds yield more than stocks.

Older investors prefer the safety of owning municipal bonds (since principal is almost always safe) as well as their tax-exempt status.