Municipal Bonds

According to www.fiscalagents.com, municipal investment bonds score 6 (high/very high) for safety.

With 1 to 30 years term, the type of risk these bonds have is inflation - interest rate risk. But these bonds also score 5 (high) for access to fund and 4 (high/moderate) for income generated.

A minimum $ 5,000 is required to purchase municipal investment bonds. The max is $ 50,000.

Earnings are paid semi annually or on maturity date. Municipal investment bonds can also be used as RRSP. These bonds can also be transferred or sold at the market value.

When these bonds are sold prior to maturity, the difference between purchase price and selling price is calculated as capital loss or gain.

The good thing about purchasing municipal investment bond is that it is fully guaranteed by issuing municipal government. This means both principal and rates are guaranteed for certain period or terms. But the longer the bond terms are, the higher the risk, just like other types of bonds.

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