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Municipal Bonds

Municipal Bonds. Municipal Bonds. Are you tired of being sold annuities? Annuities not right for you? Frustrated with taxes on CD interest? Fed up with surrender fees? Want investments that are 100% liquid? Want to eliminate the 1099 received from CD interest? Want real diversification?.

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Municipal Bonds

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  1. Municipal Bonds

  2. Municipal Bonds • Are you tired of being sold annuities? • Annuities not right for you? • Frustrated with taxes on CD interest? • Fed up with surrender fees? • Want investments that are 100% liquid? • Want to eliminate the 1099 received from CD interest? • Want real diversification?

  3. Municipal bonds are tax-exempt debt securities issued by state and local governments and their agencies. The funds raised in the sale of these “IOUs” are used to finance community projects such as: • Schools • Roads • Bridges • Housing • Nonprofit Hospitals • Colleges • Libraries What are Municipal Bonds?

  4. Types of Municipal Bonds Municipal Bonds vary by: • Type • Industry • Maturity • Credit Quality • Geographical Location

  5. Why Municipal Bonds? However, all share common features that make them a popular investment, including: • Current income exempt from federal and (in some cases) state and local taxes. • High degree of safety with respect to payment of interest and repayment of principal • Dependable, regular income • Liquidity

  6. Tax Benefits Benefits for high-income taxpayers The tax-exempt status of municipal bonds allows investors to keep more of what they earn, making them an especially attractive investment for taxpayers in higher tax brackets. In fact, some investors may earn more after taxes by investing in a municipal bond than in a comparable taxable investment.

  7. Challenges with Traditional Muni Bonds • Purchased individual municipal bonds • Low liquidity • Large investment amount needed for proper diversification • High Profile Defaults • City of New York - 1975 • Washington Public Power Supply – 1982 • Orange County CA - 1994

  8. Diversification Elevator 1 (2 support cables) Elevator 2 (22 support cables) Each Elevator is suspended on the 90th floor of a building…which elevator would you ride?

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