As people start to retire, many wonder how to invest their funds and save on taxes – some want to be conservative and some want to be aggressive.  Lockheed Martin employees are no different from everyone else when it comes to this.  So, today, we’re going to focus on one particular aspect of investing conservatively. Today, we’re going to discuss the use of municipal bond funds in a taxable non-qualified investment account. These are accounts that are not IRAs.

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  1. In a non-qualified account, the dividends and capital gains are taxable each year. Each year you receive a 1099-DIV that reports to the IRS the amount of dividends and capital gains that were generated in your account.  You, in turn, report those amounts on your annual tax return and file it with the IRS.  Are you interested in lowering the amount of taxable dividends and capital gains in your taxable account?  If yes, this is where municipal bond funds come into play.  Keep reading to find out more.
    1. What is a municipal bond? It is debt security issued by a state, municipality, or county to finance its capital expenditures.
    2. What is a municipal bond fund? It is a fund that invests in municipal bonds. 
    3. How is a municipal bond fund helpful in lowering the taxes? Because the bonds are issued by local and state governments, they are usually exempt from federal taxes, and if they are issued within the state of the purchaser, are also exempt from state taxes.
    4. Are they structured like a corporate bond? Yes, they are structured like other bonds with coupon (interest) payments and a lump sum payment at maturity.
    5. How often do they pay the interest? The bond funds pay distributions monthly, quarterly, semi-annually, or annually. 
  • Are they risky? The funds fall on the conservative side of the risk tolerance scale and often attract risk-averse investors by offering slow, steady income, and offering stability during more volatile markets. 

Knowing if a municipal bond fund is right for you take more in-depth research. There are a multitude of things you need to examine.  But, knowing these funds can help save on taxes and offer you some comfort in a fluctuating market is a step in the right direction.  The next step is to contact us.  We’re not only Lockheed Martin specialist, but we are also experts at providing advice on things like this for your investment and retirement needs! Call us today at 817-210-3444 or click HERE to book a complimentary consultation!

For more tips like these, click here to sign up for our weekly email blog newsletter. If you would like to get better educated on Lockheed retirement strategies, click here to download our Free Report titled Retire with Confidence: The Top 4 Things You Can Do Now to Maximize your Lockheed Retirement. And, if you want to have face time with a Lockheed Retirement Specialist², you can click here to schedule an appointmentclick here to sign up for our Lockheed Retirement Workshop or click here to just give us a call (817) 210-3444.

Be sure and check back next week for more incredibly valuable information. Cheers!

Disclosures*

Financial Planning and Investment Advisory offered by SWMG, LLC a Registered Investment Advisor.

Lockheed Martin Retirement Specialist is not an official title or professional designation nor is it conferred by Lockheed Martin on any individual or company.

Our Complementary consultation and free report are for informational purposes only and provided free without any obligation to utilize or retain our investment advisory services.

SMWG, LLC is not affiliated with or endorsed by Lockheed Martin Corporation. Our expertise comes from working with LMT employees for several years and helping them to retire with confidence.

Investing involves the risk of loss, including loss of principal. Past performance does not guarantee future results. Investment products are not FDIC insured, have no bank guarantee, and may gain or lose value. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable for a client’s investment portfolio.

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