They can be, but a lot depends on your Income Tax bracket. If you are in the lower Income Tax brackets, you are probably better off finding a Corporate Bond that is solid. Given the current credit environment, you want to avoid anything that might look like junk. Also keep in mind that it is pointless to use Muni's inside of a tax-deferred account such as an IRA.
Muni bonds probably don't have the high interest rate of payout as did years ago - but you will receive monthly or quarterly interest cks from the muni for a set period of time and then the principal back.
Or look for a dividend paying stock either common shares for preferred and do the math to find out which would be better.
Bonds pay out only for a specified time - corp stocks pay out till and corp bonds also for a set time.
Rog
Hi,
I suspect that your advisor is trying to save you some money on income taxes. I personally do not like individual bonds since you have to pay a broker to buy or sell them. Why do that when a "no-load" mutual fund does it for free.
Is this money that you do not need to touch for five or more years? Or, is this money you use to supplement your income? These are important questions because, if you can let this money grow for a long time, your strategy should be different than just buying munis. The problem here is that a proper strategy has to be based on answers to the questions I just asked, on your risk tolerance and so on. If your advisor has not determined your risk tolerance, you better run.
If you are familiar with Ric Edelman (Ric Edelman Show), you can contact his office during the week and they will provide you with a free consultation to give you some guidance. Note that I am not promoting them as advisors because they are too expensive. However, it seems like you need better advice than what you are getting.
