Municipal Bonds - Are Muni Bonds Really a Good Idea?

Municipal Bonds, an incredibly popular investment choice among Dentists, are no longer the "slam dunk" they were once considered to be for high-net-worth investors looking for a tax shelter.

The extreme measures some states have been forced to take in order to balance their budgets while faced with rising financial obligations and declining revenue have forced savvy investors to reevaluate their investment strategy.

ROI is always a risk when dealing with a security however, Ms. Talbutt-Glassberg, vice president and fixed-income portfolio manager at Davidson Trust Company "said that even investors who held their bonds to maturity could be in for a surprise if the municipality's finances deteriorated.

"What if when the bond matures, they hand you another one?" she said, of a forced rollover into a new bond to pay off the old one. "What do I do if I needed the money for college tuition?"

" Marilyn Cohen, CEO of Envision Capital Management, a fixed-income management firm in Los Angeles, "says it's still too early to invest anew in munis. "I think we're going to have a second wave of selling," says Cohen, co-author of the new book, Surviving the Bear Bond Market. "I think the default rate in the next 12 months is going to be significantly higher than we've ever seen before, because the market has changed.""

In order to determine a new and better direction, let's address the reasons Municipal Bonds appeal to investors in the first place.

1) Tax Benefits – although the interest rates on municipal bonds may seem relatively low compared to CD's or Treasury bills often times the tax advantages level the playing field, especially for those in the higher tax brackets.

2) Safe Investment – Between 1970 and 2000, the 10-year cumulative default rate for municipal bonds was 0.04 percent [source: Fahim]. In other words, during those 30 years, less than half of one percent of municipal bonds failed to pay back the promised interest and principle.

3) Provides a predictable tax free income stream

Well Doctor, what if I told you that you using my Family Bank concept, you can enjoy all the benefits you have with your Muni Bond investments, without any of the associated risks or downsides?

1) Tax Benefits – As a business owner, you can enjoy a lifelong tax-free income stream from your Family Bank with earnings that exceed the average municipal bond AND provide peace of mind and security for your family by establishing a life insurance death benefit….all 100% tax deductible.

2) Safe Investment – Your Family Bank is secured in an Equity Indexed Life Insurance Policy that offers guaranteed minimum earnings when the market is down and your earnings are based on a major index such as the S&P500. Your cash balance is never at risk and continues to grow even after you take out loans secured by the death benefit (tax free loans).

3) Provides a predictable tax free income stream – That is exactly the reason I designed the Family Bank

Doctor,

FEDERAL TAXES are still set to rise next year which means that wealthy investors need a safe and smart investment vehicle to help minimize their tax burden.

The Family Bank is the ideal solution and has many additional features to offer over a standard muni with the same "zero" tax benefit. I have worked with Doctors and their practices for nearly twenty years and I can tell you from experience, this is the best opportunity I have found in my career to help professionals achieve their financial goals quicker, with less effort, and with stronger results than ever before.

Sources:

http://www.nytimes.com/2010/04/10/your-money/10wealth.html New York Times
The Risks and Returns of Municipal Bonds
By PAUL SULLIVAN
Published: April 9, 2010

http://srph.it/epLZ0X DailyFinance
The One Safe Way to Invest in Municipal Bonds Now
By Charles Wallace Posted 10:00AM 04/08/11

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