Many investors prefer to invest in the municipal bonds that are issued by New York state. They obtain municipal bonds that are state tax-free in order to reduce their tax bill. Municipal bonds are stable for a long period of time. They are considered to be one of the safest investments. They have certain predictable characteristics relating to their fixed interest rates. New York state municipal bonds are given out at $5000 increments. The minimum investment in New York municipal bonds is $5000. The advantage of dishing out such kind of money is that they can be diversified by other investor bond funds which can maximize the return and minimize risk.
New York municipal bonds are associated with less risks. Since they are usually taken care of by the investment professionals there are bright chances of achieving the goals than there are when you invest on your own. There is limited training and time involved when you make such kind of decisions. These bonds have low returns on investment.
Before you choose a representative for your bond, you have to ensure that they are reputable. There are some traders who ask for the trading fees of about $10 per trade. This amount can add up to a large amount of trading fees by the year end. There are many firms that do not charge for the trade bonds. There are different tax rules that affect on the returns gained on your bonds. The state, federal, municipal governments issue bonds in order to borrow money more than the taxes of the bonds. They make the lower yielding bonds appealing by providing them with tax incentives.
The state and the local bonds are free from U.S federal taxes and are mostly issued tax-free by the states. Depending upon the tax rate of investor a high yield bond will offer less returns.
New York state municipal bonds consist of short term issues as well as long term issues. These bonds are generally sold in order to finance capital projects over the long term. There are two types of New York State Municipal bonds namely General Obligation bonds and Revenue Bonds.
General Obligation Bonds are secured in faith of the New York State. They are supported by the New York states taxing power. These bonds are generally approved by the voters.
In Revenue Bonds the interest and the principal are secured by the tax or other revenues. The projects that are financed by revenue bonds are bridges, toll roads and hospitals. There are two revenue bond programs of the New York state namely the personal income tax revenue bonds and the other is the Dedicated Highway and Bridge Trust fund bonds.
In personal income tax revenue bonds the interest and the principal are secured by up to $6 billion of the personal income tax revenues of the New York citizens that is deposited into a fund that is specially dedicated to the debt service payment.
In Dedicated Highway and bridge trust fund bonds the interest and the principal are secured by the taxes related to the transportation and the fees including the highway use taxes, auto rental taxes and the motor fuel taxes.