Guide to Texas Municipal Bonds.

On this site you will find various articles on topics of interest regarding Texas Municipal Bonds.

You’ll also find recent New Issue Municipal bond offerings.  On these offering pages you’ll see the municipal bond brokers participating in these new offerings and you should contact one of them for FULL details.

Texas  municipal bonds are generally quite stable over long periods of the time. They have more predictable characteristics due to their fixed interest rates.

The Texas Municipal Bonds guide will make some sense of bonds for those looking to get into investing.

It’s suggested that you will want to talk to a registered bond broker for a better understanding of the market and how best to apply TX Muni Bonds to your portfolio.

1. Texas Municipal Bonds Are Offered in $5000 increments

Unlike stocks, bonds are traditionally much more expensive, and are given out in $5000 increments and a minimum investment of $5000. Of course, the benefit of dishing out this kind of money is that with other investors bond funds can be pooled and diversified, maximizing return while minimizing risk.

2. Have An Expert Do It For You, TX Muni Bond managers!

Since a TX municipal bonds fund is managed by investment professionals, so the theory goes, it has a better chance of achieving its goals than the success you might have trying to invest on your own. You have limited time and training needed to make those kinds of decisions. For that service, of course, the investor pays a fee.

3. Texas Municipal Bonds Are Very Low Risk

Bonds aren’t 100% safe, but historically default rates are extremely low .  Unlike the stock market, bonds are very low-risk investments. They also have a very low return on your investment for CA Muni Bonds.

4. Buyer Beware-

When choosing a representative for your bond, be sure they are reputable. Some traders charge trading fees, as much as $10 per trade, and this can add up to a huge trading fee by the end of the year.  Most major firms do not charge a fee to trade bonds.  All commissions are built into the price of the bond.

5. Tax Issues for TX Municipal Bonds

Adding to the complexity are the differing tax rules affecting your return on bonds.

Municipal, State and Federal municipal governments issue bonds to borrow money beyond what taxes bring in. Unlike companies, they can make those lower yielding bonds more attractive by coupling them with tax incentives. An example, state and local bonds, are generally free of U.S. Federal taxes and are often offered tax-free by those states or municipalities.

Texas currently has not state income tax so Texas residents don’t need to purchase Texas municipal bonds. However it often more comforting to an investor to know a state or municipality that they are investing in.  Yields in Texas are comparable to those in other states.

A higher yield bond could return less after-tax income depending on the investor’s tax rate, and on whether the bond is subject to Federal or state taxes.

An example, assume $10,000 is invested in two different TEXAS municipal bonds: The first being a Municipal tax-free yielding 4%, and the second being a taxable bond with a yield of 5.5%. So in the case of the first $10,000 x .04 = $400 and in the case of the second $10,000 x .055 = $550. The second appears to be a better return. But now assume a 28% tax rate. $550 x .28 = $154 lost to taxes, leaving only $396 ($550 – $154). Notice how the higher stated yield returns less actual yield. A higher tax rate will make the situation even worse. An example, at 33% only $368 of interest is retained after tax.

The lesson is to remember to factor in all taxes, since a bond can be free of say Federal tax but subject to state tax or vice-versa.

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