Safety and your tolerance for investment risk are major considerations when your are making investment decisions. Three investment tools to consider are U.S. Savings Bonds, a Roth IRA, and municipal bonds.
Savings bonds –
Savings bonds are a risk-free investment because you will never lose any of the money you put into them. Savings bonds are backed by the United States government and provide you the opportunity to help finance the country’s borrowing needs as well as provide you with a stable investment.
Series EE Bonds are issued at 50 percent of face value; $50 buys a $100 Series EE bond. Each year, you can buy purchase them with a ceiling of $15,000 issue price ($30,000 face value).
You can set up a payroll savings plans for U.S. savings bonds and buy them consistently and painlessly through the years.You will need to hold onto your savings bonds for at least six months.
Roth IRA –
Your eligibility to invest in a Roth IRA is based on your Adjusted Gross Income, and whether you file your tax return as a single person or whether you file jointly. Your age enters into the eligibility requirements only by setting limits on your contributions. For example, in 2007, the contribution limits are $4,000 if you are under age 50 and $5,000 if age 50 and over. However, unlike a traditional IRA, , you are still eligible to contribute to a Roth IRA if you are age 70 1/2 or older and you have earned income.
Your Adjusted Gross Income or AGI determines your eligibility to contribute to a Roth IRA. The AGI ceiling is linked to whether you file singly or jointly. Filing a single tax return? You are eligible to make a full Roth contribution if you AGI is less than $99,000.If your AGI is between $99,000 and $114,000, you can put a portion (with a gradual decline) of your contribution into a Roth IRA and the remainder into a traditional IRA account.
Filing jointly? Your AGI would need to be less than $156,000 for 2007 . You can make a partial contribution as a joint filer if your AGI is less than $166,000 for 2007.
With a Roth IRA, your earnings grow tax-free. Although your contributions to a Roth IRA,are not tax-deductible, the contributions can be withdrawn at any time under certain conditions without penalty or tax. Earnings are free from federal tax if they are withdrawn after age 59 and the account has been open for more tan 5 years.
Many people make contributions to their Roth IRA to help reach their retirement goals. Consider opening a Roth IRA and see your savings grow tax free whie you enjoy the peace of mind of knowing that you are preparing for your future.
Municipal bonds –
Municipal bonds may be of interest to your because of the relative safety of this kind of investment. When you look into the projects in your area that are being funded by municipal bonds, you might be all the more interested and want to help support projects that directly improve roads or schools in your area. You might find that some of these projects directly or indirectly benefit you business interests.
There are General Obligation bonds and Revenue Bonds. General Obligation bonds, with the appealing nickname of GO Bonds, are backed by the fact that city, county, or state has the advantage of being able to raise revenue through taxes.
Revenue municipal bonds are offered by an entity at the city, county, or state level. A utility company such as a water company is a good example of such a revenue municipal bond. That utility, that business, has an obligation to pay the interest and does so from the revenues that come in from the business. In this case, the income is generated as customers pay their water bills. This revenue goes toward paying the bond holders.
The investment climate varies over time. Perhaps these are economic times in which you want to pursue safe investments rather than those than bear the risk of other financial investments. Maybe you are beginning your venture into the investment world. Savings bonds, a Roth IRA, and municipal bonds are three safe investment tools that you can consider to reach your investment goals.