Municipal Bonds: The Safe and Steady Way to Make Money

With the financial crises affecting everyone, it’s no wonder people get scared to death , when it comes to making the decision of where to invest there money. Playing the stock market is considered by many to be a legal form of gambling, which in some sense is pretty much true. Investors place their “bets” and play against the odds, hopefully to win. But given the stability of the market today, the odds these boys bet against have gotten tougher, resulting to failure, and in some cases ruin. That’s a fact that everyone is aware of, which also caused many to cut their losses and pull out.

If you don’t want what happened to them to happen to you, there is a “median” that’s relatively safe, in which you can invest in. And here it is: municipal bonds. Now you may or may not know what on earth this is, so for the benefit of those who don’t, let me explain: also known as munis, these are bonds that are given by public organizations just below the state level, for the purpose of raising enough funds, which will then be used for building and other building/repairing/improvement projects. Basically, municipal bonds can be categorized into two groups, the first being those that are exempted from Federal Taxes.

Not only that, but in other areas, they are also exempted from state and local taxes. That’s a major benefit, but with that comes a downfall, which is relatively low interest. Moving on to the second category, which is the group of taxable municipal bonds. The bad thing is that they’re taxable, as I’ve said earlier, but their ultimate advantage would be the higher return they come with. Doing research on them can help you pick which ones are taxable and which ones aren’t, amongst which you can choose to invest in. Moving forward, do you hate having stock investments that are really hard to liquidate? Coz that won’t ever be a problem with municipal bonds.

These puppies can be liquidated anytime you want, just incase the need rises – interested in placing your bets here? If so, read this: all you need to have, in order to get up and started, is $5,000. Comparing that to the minimum required by other investments, it’s pretty low, meaning plenty of investors can tap this resource. Here’s another tip: check out for the rating before getting involved with a company. The higher the rating, the greater the odds that the company will be paying the interest they guaranteed. Lastly, if you intend to really play things safe, you best buy insured municipal bonds, why? Mainly because the insurance company will be covering the principal and interest due, in case the company defaults; this is rare.

To conclude, not having enough balls for risk is completely understandable. And if you want to lower the risk drastically, establish a steady flow of payments coming from your investments, then I strongly suggest you go for municipal bonds – the slow but steady way to make money.