The Benefit of Municipal Investing For many income-oriented investors, it's not what they earn that's important it's what they keep. With municipal investments, the income you earn is generally exempt from federal income tax. So you keep more of what you earn. Even if you're taxed at a lower rate, the difference in income can be substantial when taxes don't take a bite out of your earnings.
How Do You Determine Whether Municipal Investing
Is Right for You?
The decision between whether a taxable or tax-exempt bond or bond fund is
right for you can be made in part by comparing the yields. Since the yields of municipal
investments and your tax rate may change over time, you should constantly reevaluate
the benefits of municipal investments in your portfolio. To discover how a taxable
and tax-free yield compare, use the following formula:
The calculator below allows you to convert a federally tax-exempt yield into a taxable equivalent therefore you can compare apples to apples.
Take a Look at the Following Hypothetical Example
An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in a money market fund.