Which Type of Bond Is Right for You?

Marvin Appel

Bonds share the basic characteristic of providing you with a dependable source of investment income. However, there are many different types of bonds from which you can choose. Let’s see how you can best meet different requirements with the various bonds available to you.

Taxable Versus Tax-Exempt

The interest you earn from a bond is subject to different rates of taxation, depending on who issued it. You will pay the heaviest taxes on interest that you receive from bonds issued by for-profit corporations. Interest on such a bond is subject to federal and state income taxes at the highest rate your income level incurs. (Unlike dividends on stocks held for more than six months, there is no tax reduction ...