What are Municipal Bonds? They're investments in cities, counties and states, much the same way you'd invest in a company. You can invest in individual bonds, or you can choose to invest in a Municipal Bond Mutual fund. But which is better? Our friend, Brad Stark, From UBS Financial Services has offered us this useful information to help break down the question: what is right for my retirement?
If you're considering an investment in individual municipals bonds, you may find the following advantages:
Conversely, with individual bonds you may find the following disadvantages:
Perhaps a Municipal Bond Mutual fund interests you. If that is the case, here are the advantages you may find:
Some of the disadvantages of Municipal bond Mutual funds are:
There are a host of tax-free municipal bond mutual funds to suit a variety of investor needs. While the majority of municipal bond funds invest in investment-grade securities, there are also high-yield, tax-free municipal bond funds that invest primarily in non-rated or non-investment-grade securities. Although these funds entail a greater degree of risk, they also can potentially earn a higher yield. For investors residing in states like California and New York, where state income tax is very high, there are single-state municipal bond funds available that provide a "double-tax-free" benefit - they are exempt from both federal and state income taxes.
With the continuing need to actually keep more of what is earned from your investments, consider consulting with your Financial Advisor and taking a close look at your portfolio to determine where municipal securities might fit in.
**Information provided by Brad Stark, UBS Financial Services, Inc. firstname.lastname@example.org