Municipal bonds are now offering extremely attractive short term interest, beating out comparable Treasuries. They are a great source of tax free income. This is new and may not last very long.
Volatility in the market has created new opportunities. You no longer have to be in the highest income tax brackets to benefit from current municipal rates. Municipals offer Federal tax free income, and if they are from your state of residence, they are also free of State taxes. This makes a huge difference when you are looking for safe income at very good rates.
Today, it is possible to get 4% or more in yields from municipals going out fewer than 10 years. That's comparable to Treasury yields well over 6% (when you compensate for Federal taxes) even when you are in a 35% tax bracket.
Municipals have become a very good investment opportunity for a much larger number of people, at all tax brackets, than ever before.
Comments
Anonymous
July 03, 2007
Thanks for this information. How long to you think this opportunity will last?
Is this review helpful? Yes:0 / No: 0
Anonymous
July 05, 2007
Even for those in the top tax bracket, the yield pickup isn't very attractive in light of the longer versus cash, especially if you believe that interest rates are headed up. One better option is the variable rate notes, which are discussed in the products and rates section on this website and only require a 28 days lockup.
Is this review helpful? Yes:0 / No: 0
Add your Comment
or use your BestCashCow account