| Name | Corporation Bonds | State / Munipical Bonds | US Series H | US Series E | Other US Bonds |
|---|---|---|---|---|---|
Intro | Also called "revenue bonds" because they're often obligations from a state/subdivion dependent for interest payments on receipts from a toll road, bridge, building lease. | Covers a wide variety of coupon rates and maturity dates. But they're all guaranteed in terms of interest and principal. | |||
Interest (Yield) | Shorter term issues yieled less than longer term issues. | Varies with quality and maturity. Shorter maturity = lower return. | 4.29% for first year, and then 5.1% for next 9 years | Series E bond interest is not paid out, but is added to their redemption value. They're sold at 75% of their face value and mature 5 years 10 months after purchase. Held to maturity this works out at 5%, compounded semi-annually. Redeemed earlier, the first year yield moves up from 4.01% to an average of 5.2% in the next 4 years. | In many cases, the yield is above than the oligated rate, an example is the transport department |
Historic performance | Early 1972, those of highest quality (Moody's AAA corporate bond index) yielded 7.19% for a 25 year maturity.
"Lower-medium" grade (BAA) return 8.23% for long maturities. | Late 1971, S&P's municipal bond index average AA, 20 years maturity, yielded 5.78%.
Vineland, N.J bonds rated AA for A, yielded 3% on a 1 year maturity, rising to 1995 and 1996. | In late 1971, long term issues (10yrs+) showed an average yield of 6.09%, intermediate (3-5yrs) 6.35% and short term 6.03%. | ||
Taxation | Both federal and state tax. | Free of federal income tax and in the state of their issue. | Interest from bonds is subject to Federal income tax (annually when interest accrues or when the bond is disposed of) but except from state income tax. | 👈 Same | Could get some older issues at discounts, because accepted for estate taxes at the same value (1 tax dollar = 1 bond dollar). |
Cashing out | Cash anytime, at cost. | Any time, at their current redemption value. Can exchange these for Series H, with some tax advantages. | |||
Lost, destroyed, stolen? | Replaced without cost | 👈 Same | |||
Purchase limitations | Yes, but there are liberal provisions for co-ownership with family members. Essentially means you could probably buy as much as you can afford | 👈 Same | |||
Renewal/ extension | Right to extend bonds at maturity (means you continue to accumulate annual values and higher rates 😲) | ||||
Safety | Not all are safe! An AAA rating from Moody's or S&P means safe. | Very safe | Very safe | Very safe |