Tax-Free Investing

by Charlotte Wood
(last updated February 21, 2009)

The age old adage "nothing is certain in life except death and taxes" rings true in most situations, however if you consider tax-free investing, you can avoid the latter certainty and I think that to be most exciting! There are ways you can avoid paying taxes on certain investment returns and that is one way you can definitely gain from investing in tax-free options. It's not too complicated and the benefits are obvious!

The main type of tax-free investing is through municipal bonds, or bonds whose funds go directly toward community and state improvement. Other tax-free income funds include national, state specific, insured, high yield, and short and intermediate term funds. These bonds are free from federal taxing and in most cases, free from state and local taxing as well. (Because the funds invested go toward general improvement, states don't usually tax the returns).

You can also look into a tax free income fund, which basically protects your municipal bonds. This kind of fund protects you against state and local income tax especially. Here are some various income funds for you to consider:

  • National and tax free funds: these invest in municipal bonds
  • State specific tax free funds: these focus on a specific state to exempt you from certain taxes
  • Insured tax free funds: these funds cover insured municipal bonds
  • High yield tax free funds: these usually deal with lower rated municipal bonds
  • Short and immediate term tax free funds: these funds are set according to their term and the longer the term, the greater return you'll receive
  • Tax free money funds: these funds can maintain a stable net value of $1.00 per share net asset value

As you can see, there are multiple ways in which you can invest in tax free investments and it just takes a little research on your part. If you have a stock broker, they should be able to help you set up whatever else you need and then you'll be good to go on your tax free investments!

Author Bio

Charlotte Wood

MORE FROM CHARLOTTE

Coloring Your Hair

Hair coloring has been around for decades and is still going strong in the hair fashion world. It's fun and gives you a new ...

Discover More

What are Sedu Hair Straighteners?

Sedu is still a very new term in the mainstream society and so many still ask: what is it? This revolutionary hair ...

Discover More

Vaginal Contraceptives

There are several types of contraceptives out there at your disposal and you should try and consider vaginal contraceptives. ...

Discover More
More Money Tips

Successful Long-Term Investing

Investing for long term success is a skill that needs to be honed and constantly tweaked. You can be successful, but need to ...

Discover More

Investing in Currency

Investing in currency in an area of investment most don't usually think about but one that can yield high balance results and ...

Discover More

Investing in Real Estate

Real estate investment started becoming more popular in recent years and now is quite the trend for everyday investors. What ...

Discover More
Comments

If you would like to add an image to your comment (not an avatar, but an image to help in making the point of your comment), include the characters [{fig}] in your comment text. You’ll be prompted to upload your image when you submit the comment. Maximum image size is 8Mpixels. Images larger than 600px wide or 1000px tall will be reduced. Up to three images may be included in a comment. All images are subject to review. Commenting privileges may be curtailed if inappropriate images are posted.

What is 0 + 7?

There are currently no comments for this tip. (Be the first to leave your comment—just use the simple form above!)