Florida Municipal Bonds -  What You Must Know About Florida Munis

Florida, the Sunshine State, can lull anyone into thinking that life is good and the land is paradise itself. But like anything on Earth, appearances can deceive because Florida was not spared the economic recession both in the United States and in other countries. But if you have invested in Florida municipal bonds in prior years, then you should have a secure nest egg to fall back on.

Yes, despite the economic downturn in recent years, the municipal bonds issued by the state government and its instrumentalities are still good investments in the eyes of investors. It must be emphasized that the state's credit rating is still satisfactory.

But before thinking of investing in Florida municipal bonds, it pays to know a few important things about these debt instruments. At the very least, you are going into the investments with your mind open to the risks involved.

Florida Municipal Bonds Are Issued for Public Purposes

These municipal bonds are both short-term and long-term bonds issued by the state to fund various programs and projects including but not limited to storm sewers, roads and bridges as well as for housing complexes and school buildings. Basically, these are loans (IOUs) by the State of Florida to the investors who purchased the debt instruments.

You are then helping your community to improve via infrastructure facilities while also making money in the future. This is a way of giving back to the state that helped improve your own life, indeed.

Tax Exemption Status

Municipal bonds are popular especially among the high-income sector because of their tax- exempt status. You will not be required to pay taxes on the federal and state levels for income earned on Florida municipal bonds although there are certain exemptions to the rule when it comes to local agencies.

Even when there are taxes imposed on Florida municipal bonds, these are miniscule. Take note that Florida is one of the states with the least tax burden on its residents - it's ranked 45th of the 50 states with the highest taxes with only 5 states imposing lower taxes.

Florida Municipal Bonds & Flexibility in Maturity

Going back to the period of maturity, you can choose from maturity periods of anywhere from 90 days to 40 years. Your investment goals largely influence the period of maturity chosen for the municipal bonds' purchased.

But even when you want to cash in on the present market value of the Florida municipal bonds, you can easily do so. This is because these bonds can be passed on from one bearer to the other without authorization from the State of Florida. Whoever holds the bonds at the date of maturity will be considered the rightful owner - possession is 9/10 ownership, after all.

Buying these municipal bonds are as easy as selling them, of course. Just go to a bank or credit union nearest your place of residence and then tell the staff that you want to buy municipal bonds. These are sold in increments of $5,000 each bond.

In conclusion, the only conceivable risk is that the Florida municipal bonds will be called back by the state earlier than the stated maturity date. But take note that this is a rare event so hold on to your bonds and earn interest in the meantime.