Finding Valuable Investment Information

20
September

Individuals are seeking ways to safely invest their money. In 2009, most individuals chose the following safe modes of investments, according to an investment website:

• Savings Bonds

Interest paid on US Savings Bonds is exempt from and local income taxes. These investment interests can be purchased over the internet and from a local commercial bank. Individuals requesting bonds will them at a later point in time in the mail.

Two types of US Savings Bonds exist for the common public. Both types are listed below:

I Bonds

I Bonds are indexed for inflation. Individuals may receive an I Bond either on paper and electronically. I Bonds can be purchased at face value. The minimum value for a paper US Savings Bond is $50. The minimum value of for an electronic US Savings Bond is $25. Electronic US Savings Bonds will be issued by the Treasury Direct. The maximum value that an individual can purchase is $30,000 in paper bonds and $30,000 electronic bonds.

EE Bonds

EE bonds may also be issued either on paper or electronically. A $100 EE bonds will appear on paper as a $50 bond. Therefore, their face value is half of what is paid for the bond. Electronic bonds may be purchased by the investor at face value. A $100 Series EE Bond will be issued electronically for $100.

Like the I Bond, the minimum purchase is $25 for a $50 paper bond or $25 for a $25 electronic bond. The maximum annual purchase is $30,000 for both electronic and paper bonds equaling a total of $60,000 annually.

A Series EE bond may not reach its face value for 14 or more years. Since the rates change every 6 months, no one can predict what the rate will be. The lower the interest rate is the longer the US Savings Bond will take to mature.

• 401K Plans

The 401K plan allows individuals to save money tax free until the money is withdrawn from the account. The withdrawal typically occurs at retirement. Employers will often match employee contributions up to a certain amount. Investors are allowed to select how aggressively they will invest the money in their tax free savings plan.

• Capital Gains Taxes

Individuals must understand capital gains taxes when making investments. Short term gains are taxed according to your tax bracket like ordinary income. However, long term gains depend upon your income and have several different percentages. For example, long term gains for individuals in the 10% or 15% federal tax bracket are taxed at 5%. Some types of real estate depreciation may be taxed as high as 25%. Taxes on items such as collectibles, restricted stock, and other assets may receive long term gains tax as high as 28%.

• After Hours Trading

Many individuals engage in after hours trading to increase the value of their investments. Before 1999, after hours trading was only accessible by large corporations and institutions. After this time period, individual investors were allowed to participate in the market. Prices fluctuate in stocks after hours as it does during business hours. Therefore, individuals would like access to maximize their investments during these hours.

• Annuities

Annuities are a form of investment that allows individuals to save tax deferred for retirement. This investment vehicle may be purchased by insurance companies. Annuities may have fixed term or variable interest rates. Fixed term is guaranteed for the life of the annuity and variable rate changes with the underlying security. Many variable rate annuities have a minimum fixed rate in addition to the variable portion. Annuities will pay a guaranteed sum for a specified period of time or annually.

• Estate and Gift Taxes

Estate taxes are required on the money that is left to heirs. Taxes are also imposed on gifts a person gives to another person that has not been taxed. There is an annual inclusion amount that varies from year to year.

• Stock Options Basics

Options are a contract between a buyer and seller that is based upon an underlying security, such as real estate, futures contracts, exchange index, or a stock. Stock options may either American or European. An American stock may be exercised anytime from the time of purchase to the expiration date. A European option may only be exercised on the expiration date.

• UGMA Accounts

IRS allows investors to give a certain amount of money to minors each year tax free. That amount depends upon the limits. It may be thousands of dollars per year. No attorney is needed as long as a custodian is established for the minor.

• Moody Ratings

Moody’s Ratings allow the investor to know the risks involved with holding a particular bond. The risk describes the interest amount required by the issuer of the bond to encourage investors to purchase the bond. Bond ratings consist of the following designations: Aaa, Aa, A, Baa, Ba, B, Caa, Ca, and C. The ratings may also include numbers as designations as well.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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