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Tax Free Municipal Bonds: Why America Needs to Diversify Now
Pinnacle Digest writes: Investing in bonds has long been the bread and butter of many institutional investors, but remains largely misunderstood by the average investor.
Access to Tax Free Municipal Bonds could be a safe haven for investors in future years as taxes increase. Under Obama's latest plan, if approved, roughly 1.25 million Americans will pay more in taxes next year. Taxes are set to rise for households making more than $250,000. The top marginal tax rates, under the plan, will rise to 36 and 39.6%. This is up from 33 and 35%.
Holmes explains that in an environment where government policy is driven by socialist agendas, a flight to investments that lower tax bills will emerge. Holmes evaluates Municipal Bonds - in particular which ones have proven almost failsafe in recent history.
Although many have predicted a bursting of the US bond market for years, many bonds continue to act as a stabilizing, profitable portion of an investor’s portfolio.
Moody’s Investors Service released a report which found that defaults for rated municipal bonds remain extremely low, with only 71 defaults from 1970 to 2011. It is also important to note that 73 percent of those defaults occurred in the family affordable housing and not general obligation bond issues.
U.S. Global Investors discusses its take on the Municipal Bond sector and the difference between various bonds investors can choose from. With higher taxes around the corner, potentially for all Americans, ways to preserve capital and legally avoid taxes are more important than ever.
As Winston Churchill once said, “We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”