Tax Free Yields – Are they Worth it?

3 02 2012

What are “munis”?  Municipal bonds are issued by local governmental units or a state.  The type of bond issuers include cities, counties, school districts, publicly owned airports and seaports, and any other governmental agency.

These bonds are exempt from Federal income tax as well as the income tax in which the state they are issued (Note: the holder must live in the state in which the bond is issued for income tax exclusion).

The money generated from the purchase of municipal bonds helps to finance various projects around the community – schools, city streets and other public projects.

Try out this calculator if you want to figure out what taxable yield you’ll need to achieve in order to reach the same rate of return on a tax-free bond.

Intrigued?  Want to purchase a municipal bond?  Follow these steps.

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