Money Markets pay 1.1% now (Fed taxable), but municipal bond ladders (not Fed taxable) are averaging over 2.5%. The bond default rates, especially with higher AAA ratings, are very low. Also, there is a small Fidelity transaction fee, so to invest $200,000 requires $2,000 upfront to buy. Normally, something like a bond fund is preferable, but when interest rates changes then those bond funds can lose real money. It seems less risky to just buy the funds outright, and get a guaranteed rate of return. Fidelity recommends some AA3 bonds too, but not sure if those are too risky.
You don't know how the municipal project is managed or the financial controls, but I guess that is what the bond rating covers. Stock index funds seems much more comforting to invest in because I understand them and I'm more familiar with their risks/rewards.
Submitted July 28, 2017 at 02:34PM by RedditTempSpring http://ift.tt/2eUk8Vm
