Municipal bonds are the informal debt instruments issued by county, state and city governments, to raise money for the community projects such as hospital, new school or a highway. The main feature of municipal bonds as a form of investment is that, the interest paid to the municipal bond owner is federal tax exempted. In addition, investors are exempted from state taxes in case they reside in the same state of issuance of municipal bonds.
On the other hand, the local government sanctioned entities or special state government entities issue the revenue municipal bonds.
With the revenue generated from business backing the obligation, investors stand to gain from the interest. In case of water firms, bondholders get cash payment from the amount generated by the customers who pay their water bills.
Taxable Municipal Bonds V/s Tax – Free Municipal Bonds:
Investors having an average interest in bonds may have a difficult time in deciding between tax-free municipal bonds and taxable corporate bonds. With the help of a formula known as taxable yield, investors can decide on the type of fixed income investment that may provide them with greatest after-tax return.
Below mentioned are the two major thumb rules beneficial for amateur municipal bond investors:-
Safety of Municipal Bonds:
In relation to the individual municipal bonds, very little information is available. This forces the investors to depend heavily on credit ratings that credit agencies assign.
In order to ensure the safety of their investments, bondholders need to find out the following:-
Investors need to ask themselves, as to whether the place where they are investing is a promising community with a high net worth having growing citizen base, or a degenerating metropolis having low-income demographics.
In the security analysis of 1942, Benjamin Graham mentioned the below listed characteristics of municipal bonds:-
As compared to the high-risk private bonds, investment in government bonds is the best risk free option. There is no wonder that conservative people still opt for municipal bonds as a risk free form of investment.
Investment in municipal bonds yields double benefit to the investor. The first one is that, the investor gets to invest in public development projects and the second benefit is that, it comes with a small smart gain for the investor.
Strategies for Securing Low-Interest Personal Loans
In the quest for financial flexibility, personal loans have become a go-to resource for many, offering a lifeline during cash crunches or funding for major life events. However, the key to maximizing their benefits lies in securing loans with the lowest possible interest rates. High-interest loans can lead to a financial drain, so it's crucial to navigate the loan market with a keen eye. This article delves into practical strategies to help you secure personal loans with favorable rates, ensuring your wallet remains healthy.What Exactly is a Penny Stock?
There are a ton of definitions out there for what exactly a penny stock is. The general accepted definition by both the public and the SEC is a stock priced under $5 a share. Usually a penny stock doesnt have much of a history behind it and the company as a whole is valued at $4 million dollars or less.When is the Best Time to Sell Stocks
A lot of work and time is put into selecting the right stock to invest in but it can be quite difficult, and frankly nerve racking to decided when to sell a stock. This is especially true if youre a new investor and investing in Penny Stocks. Much money can be lost by pulling out at the wrong time or holding onto a stock longer than you should have.