Category: Bonds

Getting Help from a Financial Professional

Are you suddenly on your own or forced to assume greater responsibility for your financial future? Unsure about whether you’re on the right track with your savings and investments? Finding yourself with new responsibilities, such as the care of a child or an aging parent? Facing other life events,...
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Municipal Bonds and Tax Planning

Even though the interest from municipal bonds is generally exempt from federal income tax, there are other tax issues you need to keep in mind when considering whether to purchase a muni. Only interest is tax exempt A bond’s tax-exempt status applies only to the interest paid on the...
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Types of Municipal Bonds

There are many different types of municipal bonds, though a single bond may fall into several of the following overlapping categories: General obligation/revenue bonds General obligation, or GO, bonds are backed by the issuer’s taxing power; the issuing body may raise taxes to cover the interest payments if necessary....
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Municipal Bonds and Their Tax Advantages

State and local governments often borrow money to supplement tax revenues and to finance projects such as new highways, buildings, or public works improvements. Such bonds are known as municipal bonds (“munis”) or tax-exempt bonds. Most municipal bonds and short-term notes are issued in denominations of $5,000 or multiples...
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Inflation and Bonds: The Ups and Downs

    The price/rate seesaw Inflation has an impact on most securities, but it can particularly affect the value of your bonds. Why? Because bond yields are closely tied to interest rates, and when interest rates and bond yields rise, bond prices fall. When the Federal Reserve Board gets...
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What’s Taxable, What’s Not

  Comparing taxable and tax-free yields involves making sure you understand a bond’s tax status. The interest on corporate bonds is taxable by local, state, and federal governments. However, interest on bonds issued by state and local governments–generically called municipal bonds, or munis–generally is exempt from federal income tax....
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Comparing Taxable and Tax-Free Yields

Comparing Taxable and Tax-Free Yields $5,000 taxable bond paying 5% interest $5,000 municipal paying 3.5% Federal tax bracket 28% 33% 35% 39.6% Annual interest $250 $250 $250 $250 $175 Paid in taxes $70 $82.50 $87.50 $99 $0 Net income $180 $167.50 $162.50 $151 $175 Note:This hypothetical example is intended...
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Yield to Maturity, Yield to Call

  Yield to maturity (YTM) reflects the rate of return on a bond at any given time (assuming it is held until its maturity date). It takes into account not only the bond’s interest rate, principal, time to maturity, and purchase price, but also the value of its interest...
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Watching the Yield Curve

Bond maturities and their yields are related. Typically, bonds with longer maturities pay higher yields. Why? Because the longer a bondholder must wait for the bond’s principal to be repaid, the greater the risk compared to an identical bond with a shorter maturity, and the more return investors demand....
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Coupon Rates and Current Yield

Coupon Rates and Current Yield If you’re considering investing in a bond, one of the factors you need to understand is its yield. But it’s important to know exactly what type of yield you’re looking at. What exactly is “yield?” The answer depends on how the term is used....
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Series EE Bonds

Yes. Series EE bonds (which may also be called Patriot bonds) are generally inexpensive, low-risk investments whose earnings are exempt from state and local taxes. In addition, in the college savings game, the interest earned by Series EE bonds (and Series I bonds) may be exempt from federal tax...
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