AAA Rated Insured Municipal Bonds
Municipal bond investment can reward the investor with many benefits provided the bonds are insured. What determines whether or not a bond is insurable? It’s actually dependent on its rating. Insurance coverage can only be bestowed upon those municipal bonds that are worthy of this coverage, basically high quality is equivalent to high ratings. These bonds are tax free and in addition, offer other advantages when it comes to taxes.
Bond investment of the highest quality
This is what insured municipal bonds are all about. Upon verification of the quality of the issuer as well as the quality of the bond itself, it is then eligible for insurance; be it a tax free municipal bond or otherwise. Losses are few and far between due to the protection put forth by the fact that these high quality bonds are insured, thus their AAA rating.
Guaranteed principal payments and interest
As a holder of these insured bonds, you are protected from nonpayment even if the issuer of the bond is unable to meet principal payments or pay the interest owed. This is where the insurance comes in. Should the unthinkable happen, and the issuer defaults on the bond, the insurance kicks in and puts forth the monies owed to the bondholder on interest or scheduled principal payments in a timely manner. This is probably the first and foremost desirable quality appealing to most investors. At any time you can guarantee a bond or gain, it would be foolish to pass it up.
Conservative and low risk is the way to go
The fact that a third party insures these investment bonds is what makes AAA rated insured municipal bonds such a sure bet. If the thought of investing in this day and age frightens you, as it does me; or if you got stung by investments that went south as our economy entered into its downward spiral, as did I, these bonds are about as low risk and conservatively regarded as investment bonds can get.
Want to diversify your portfolio?
Well, this is yet another aspect of AAA rated insured municipal bonds being able to help you out. These bonds are perfect for portfolio diversification due to their guaranteed yield. When your portfolio has fewer risks for loss in regards to your capital, these bonds – remember they are tax free – will not only lessen the risk but guarantee better returns in the long run. Even if you’re losing money in other areas, your insured municipal bonds will more likely than not show gain.
Higher ratings equal better liquidity. Other investors will jump at the opportunity to purchase these bonds from you due to the fact that they are not only high quality but guaranteed as well. Waiting periods for cashing out are greatly reduced because of this. Liquidity is a huge part of good solid investing. Basically, AAA rated insured municipal bonds will supply you with the liquidity you need for your investment.
The yield on these bonds is better than those uninsured bonds
I found this to be amazing in the world of investment. I always thought that the higher risk means you stand to gain more, should your ship theoretically come in. Not so with insured municipal bonds, the fact that these bonds are guaranteed actually allows them higher yield than uninsured bonds.
Any tax break is a good break
Tax breaks, among other things, are what AAA rated insured municipal bonds can offer you. Other bonds can't hold a candle to these bonds in not only the category of guaranteed payment (insured) but because they offer a number of tax breaks. Federal taxes cannot be taken out of these investments. The federal government can't touch them; that quality alone makes a good number of people in today’s economy feel relief and instills a sense of security. In some cases, the bondholder may even be exempted from state or city taxes if they live in the same city/state from which they procured their insured municipal bond. Little tax breaks can add up thereby becoming big tax breaks.
Where the world of investments is concerned, I let a horrendous experience sour me on future investing. With the assurance of payment on AAA rated insured municipal bonds, I find myself actually looking forward to investing again.