Tax Free Investment Income

Finding the best tax exempt investment options starts by understanding why it is important to be able to take your income and put it into a portfolio of tax saving instruments that will yield you returns in the long term.

Lets start with why you will want to choose tax free investing, a main reason is that tax-free income funds provide monthly income free from federal income tax, also you can choose to receive your monthly dividends by check or for reinvesting those dividends in order to take advantage of tax-free compounding for maximum long-term growth.

Tax Free Income Funds

Franklin Federal Tax-Free Income Fund of Franklin Templeton Investments, is a fund that invests at least 80% of its total assets in investment grade municipal securities whose interest is free from federal income taxes, including the federal alternative minimum tax.

Tax Free Mutual Munds

Fidelity Tax-Free Bond Fund is named by Businessweek as one of the bond funds earning its A ratings when compared to all other bond funds. Some tax free municipal bond funds for tax wise investments are:

• AAA rated insured bond yielding 7 percent tax free interest

• GNMA Bond yields 9.5 percent tax exempt interest

If you have a tax free investment account practice these simple tips on how to keep more of your investment. Once you invest some money and then make a profit these are known as long term capital gains of your capital assets. You will want to determine the individual tax rate on net investment income because it depends on whether it is interest income, dividend income or capital gains.

How To Invest In Tax-free Mutual Funds

First you would want to check the risk rating of each fund, request and read each prospectus, get financial advisor advice, lastly decide on your investment goals while you find out if your state permits tax free mutual funds.

One of the reasons this is such a safe investment vehicle is because bonds are financial instruments that the city is paying the loan back on with interest from the bonds sold to individual investors. You are able to keep more of the income due to the bonds being invested in local government projects. This allows the borrowed interest payments to not be taxed.

Businessweek Investments Insights

http://www.businessweek.com/investing/insights/blog/

http://hubpages.com/hub/How-to-Avoid-Capital-Gains-Tax

http://hubpages.com/hub/Investing-in-a-recession