Taxable municipal TARP const. bonds

nwroseladyNovember 11, 2009

Recently my financial advisor has suggested I invest in some taxable municipal bonds created by local taxing districts to raise money for infrastructure projects under TARP. The bonds pay 6.5-6.75% and are backed by the Federal government, so this makes investment in risky places like CA not so risky. I have a small estate, am retired at 64, and am risk-averse. Does anyone know anything about these bonds? What do you think?

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Haven't really studied much, just brief skimming over a few places, but I believe the TARP-Muni would cover/pay 35% and the issuing entity the remaining 65%. I couldn't find if the government guarantees the whole bond or just its 35%. I am not certain the concept has been activated yet - has it?

How bond savvy are you? Are these General Obligation or Revenue bonds? In other words what is the source of that 65%?

How much more future government intervention will come along (and it surely will) to retroactively affect this proposed investment? Can you determine independently from your financial advisor if or not it might be wise to let the dust settle on this idea for a couple years?

Last but way from least - What's in this for your advisor? This is a new concept and many advisors will climb on the band wagon......Commissions don'tchaknow.

    Bookmark   November 16, 2009 at 11:51AM
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