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#1
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I"m looking to invest about 50k
I"m looking for something short term 1-3 year, and very safe. I talked to finacial adviser, who recomended muni bonds. He said they avarage at about 10% per year, and they are very safe.He also mentioned that the interest is tax free. I know nothing about investing, is this a good way to go for short term? |
#2
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Which Munis get 10%? I'm not very well informed about them but I thought they got about 5% tax free yields on avg. 10% apy tax free and very low risk seems almost too good to be true.
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#3
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I found this web site when I did a little googling. If you put in over 25k you get a little over 9% return. Anyone have any experience with the site?
http://www.cpsnotes.com/ad.php?gclid...FQlzWAodt1g3GA |
#4
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Thats why I"m asking, actually he said 8-10%
Even if I get 5% tax free is that a good way to go for short term investing? Are there any better options? |
#5
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Could be wrong, but I don't think those are Municipal bonds issued by the government. Hence not tax free, and not very low risk.
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#6
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[ QUOTE ]
I"m looking to invest about 50k I"m looking for something short term 1-3 year, and very safe. I talked to finacial adviser, who recomended muni bonds. He said they avarage at about 10% per year, and they are very safe.He also mentioned that the interest is tax free. I know nothing about investing, is this a good way to go for short term? [/ QUOTE ] That link is for high yield crappy paper. ST munis yield 3.7% or so. There is no non risky way to get materially more than that. Your advisor is an idiot if he told you you could 10% in munis. |
#7
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I don't understand why someone would want to invest low risk, low yield bonds nowadays when you can get an online money market account that pays 5.4% apy. Even after 35% in taxes this still yields 3.51% annually with full access to your funds. This may be a decent option for you. Check out www.countrywide.com
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#8
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http://www.bloomberg.com/markets/rates/index.html
2 year Muni's are paying 3.7% and are free of federal income tax and state income tax if you buy 'em from your own state of residence. These are average rates and specific returns will vary depending on credit quality and state of issue and whether they're callable, whether they're revenue bonds, whether they're subject to AMT, whether they're insured... I cannot imagine what your financial advisor is thinking. You ain't gettin' no 10% return on any muni that isn't teetering on insolvency. Find a new financial advisor unless this one can explain himself. If your advisor really is trying to invest your cash that you've said you want to be very safe in a bond or bond fund returning >=10%, RUN AWAY. If you are in a high tax bracket and live in a high tax state like California, and are fairly sure you don't want the money until the bond matures (you can sell the bond early but may take a loss doing so), munis might be ok. 3.7% tax free is equivalent to 5.8% if you're paying a 37% incremental tax rate (figuring 28% federal, 9% state here) and if you're paying 35% to the Feds and 9% to the state it's up to 6.6% equivalent yield. |
#9
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[ QUOTE ]
I don't understand why someone would want to invest low risk, low yield bonds nowadays when you can get an online money market account that pays 5.4% apy. Even after 35% in taxes this still yields 3.51% annually with full access to your funds. [/ QUOTE ] Because you can easily get 4-4.5% in munis? |
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