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Most people who save for their retirement with annuities, pension plans or 401(k)s, usually choose to throw their lot in with basic and sensible investments – tax-advantaged long-term accounts. These accounts can be a sensible choice because they allow for great tax benefits. As wonderful as they can be for your retirement planning, there can be one little potential chink in the armor – if you're someone who has trouble sticking to a plan, you might take advantage of how they allow you to make withdrawals even before you retire. What do you do if you want a great investment opportunity for your retirement, that's also safe from your own prying hands? This where you learn about what are municipal bonds.

A municipal bond is a great way to get tax benefits on your retirement investments, and actually get some kind of access to your money when you really need it. They're great also because they offer you compound interest, and give you a great deal of liquidity.

So let's start at the basics. What are municipal bonds?

When you're trying to structure an investment portfolio that you would like to see do something other than crash and burn, you need to pay a lot of attention to how much money you will put into each kind of investment. They call this portfolio asset allocation. Mutual fund managers actually charge hundreds of thousands of dollars in fees just to offer advice on how much money to put in each kind of investment. It's that big a deal.

It's a big deal because the savvy investor needs to understand how much risk each kind of investment presents. And then, he needs to balance one kind of risk against another until he’s attained some kind of optimal balance. You certainly need to be knowledgeable about how much risk everything involves.

What exactly do you need to know before you set up a portfolio asset allocation plan? Well, once you know what to do, it can be simple enough. Your first step would be to draw up an investment strategy.