What are municipal funds?
How do they work?
Ae they for (very) small investors?
See here for a short overview. In brief, municipal funds let you invest in local government projects, and may offer tax-free income in return.
So, is this something a guy who makes in the low 20s/ early 40’s agebracket should look at for retirement?
[QUOTE=Bosda Di’Chi of Tricor]
So, is this something a guy who makes in the low 20s/ early 40’s agebracket should look at for retirement?
[/QUOTE]
One hesitates to give investment advice over a message board, but probably not. The primary attraction of munis is that they’re tax-free, but there are other vehicles to achieve tax-free (or at least tax-deferred) retirement savings growth. Plus bonds in general are fixed-income securities and don’t offer the long-term capital gain potential of equities.
In general, the person attracted to munis would be somebody who’s well off and already retired–somebody who needs tax-free income, now.
[QUOTE=Freddy the Pig]
In general, the person attracted to munis would be somebody who’s well off and already retired–somebody who needs tax-free income, now.
[/QUOTE]
Or someone who is very risk and tax adverse. My father invests only in them, and except for 2001-2002, my investments have done a lot better. He also doesn’t have enough income for the tax-free nature of the bonds to make much difference. I suspect he is not all that uncommon for a holder of municipal bonds who is not rich.
Here are a few discussions of munis as investments:
Municipal bonds up to bat
Strong demand defies rising rates, but supply is tight
How to use bonds to cut investment risk
http://www.findarticles.com/p/articles/mi_m1365/is_7_29/ai_54195609
Packing a punch - municipal bonds as an investment - Personal Finance
On individual bonds vs. bond funds: Businessweek - Bloomberg
Here is a good website about municipal bonds and if they’re a good choice for an investor. Investing in bonds has more information than you’d ever want to know about bonds as well.
[QUOTE=Bosda Di’Chi of Tricor]
So, is this something a guy who makes in the low 20s/ early 40’s agebracket should look at for retirement?
[/QUOTE]
Certainly not as your only form of Investing or for your only means of retirement. Beyond that I wouldn’t say in a GQ way.
IMHO it is conceivable if you had a good 401K, a Roth IRA and a balanced portfolio otherwise and you wanted something low risk (which for you, as presented, I think is more important than the Tax Free nature) then maybe it could be a vehicle for you.
Read these great links and decide (and I agree that taking Financial advice from a MB isn’t wise - and I know you are just curious and not really seeking “advice“ - but others who read the thread may not )