The Woo Group RBC Wealth Management Hong Kong USA - Taxable Muni Bonds
Municipal bonds are debt obligations issued by states, cities, counties and other governmental entities to raise money to build schools, highways, hospitals and sewer systems, as well as many other projects for the public good.
When you purchase a municipal bond, you are lending money to an issuer who promises to pay you a specified amount of interest (usually paid semi-annually) and return the principal on a specific maturity date.
Not all municipal bonds offer tax exemptions from both federal and state taxes. Taxable municipal bonds are taxable at the federal level, but may offer state, and often local, tax exemption on interest paid to investors who reside in the state of issuance.
What are Taxable Municipal Bonds?
Taxable municipal bonds exist because the federal government will not subsidize the financing of certain activities, which do not provide a significant benefit to the public at large. Investor-led housing, local sports facilities, refunding of a refunded issue and borrowing to replenish a municipality’s underfunded pension plan are just four types of bond issues that are federally taxable. Taxable municipals offer yields more comparable to those of other taxable sectors, such as corporate or government agency bonds. The growth of the taxable municipal market in recent years has been astounding. Since 2008, $427 billion has been issued in the taxable space, including AMT.
The advantages of Taxable Municipal Bonds
Taxable municipal bonds provide investors with a number of appealing features:
• Safety — Because of their municipal backing, taxable municipals are less susceptible to event risk versus other taxable products such as corporate or government agency bonds.
• Value — Municipal bonds are second only to U. S. Treasury bonds when it comes to security. Taxable municipals offer higher yields than other government agency bonds and in many cases, corporate bonds.
• Liquidity — The highest percentage of taxable municipal bond
When you purchase a municipal bond, you are lending money to an issuer who promises to pay you a specified amount of interest (usually paid semi-annually) and return the principal on a specific maturity date.
Not all municipal bonds offer tax exemptions from both federal and state taxes. Taxable municipal bonds are taxable at the federal level, but may offer state, and often local, tax exemption on interest paid to investors who reside in the state of issuance.
What are Taxable Municipal Bonds?
Taxable municipal bonds exist because the federal government will not subsidize the financing of certain activities, which do not provide a significant benefit to the public at large. Investor-led housing, local sports facilities, refunding of a refunded issue and borrowing to replenish a municipality’s underfunded pension plan are just four types of bond issues that are federally taxable. Taxable municipals offer yields more comparable to those of other taxable sectors, such as corporate or government agency bonds. The growth of the taxable municipal market in recent years has been astounding. Since 2008, $427 billion has been issued in the taxable space, including AMT.
The advantages of Taxable Municipal Bonds
Taxable municipal bonds provide investors with a number of appealing features:
• Safety — Because of their municipal backing, taxable municipals are less susceptible to event risk versus other taxable products such as corporate or government agency bonds.
• Value — Municipal bonds are second only to U. S. Treasury bonds when it comes to security. Taxable municipals offer higher yields than other government agency bonds and in many cases, corporate bonds.
• Liquidity — The highest percentage of taxable municipal bond