Municipal bonds (munis) have been around for years and offer investors interest income that is tax-exempt, free from federal income taxes.  This is important to many bond investors, because they buy bonds for the higher income they pay vs. CDs and savings accounts.  Municipal bond funds invest in munis.  Hence, if you buy the fund, you are invested in municipal bonds and receive dividends that are free of federal income taxes.

Municipal bonds are issued by states and local government entities to raise capital (money) for major projects.  The U.S. government gives them a break by not levying income taxes on the interest they pay to investors.  This makes it easier for the state of Ohio, for example, to sell bonds and raise money.  It also allows the state to pay a somewhat lower interest rate than a corporation with a high credit rating would need to pay to attract investors.

When you invest in a municipal bond fund professional money managers manage a diversified portfolio of munis for you.  Some fund families offer funds that are double tax-exempt.  For example, an Ohio Tax-Exempt Bond Fund would pay Ohio residents dividends free from both federal and state income taxes.

There are three factors you should consider before investing in any muni bond fund.  One, your tax bracket.  Two, expenses.  Three, interest rate risk.

Let’s say that you are in the 25% tax bracket, which means that in 2008 your taxable income was over $65,100.  You want to invest $10,000 into a bond fund.  You find a high-quality taxable bond fund that will pay 6% in dividends, or about $600 a year.  After paying 25% to the IRS, you net $450, or 4.5%.  You pay tax on the interest (dividends) whether you receive it or simply allow it to reinvest and buy more shares in the fund.

In the 25% tax bracket, if you can find a muni bond fund that pays over 4.5% tax-exempt, it is to your advantage to invest in it.  The higher your tax bracket, the greater the advantage.  If your taxable income was over $200,300 in 2008, for example, you were in the 33% or 35% tax bracket.  A 6% taxable bond fund would have left you with only about 4% net after taxes.

Second, mutual fund expenses and sales charges only work against the investor.  On a $10,000 investment, a 3% sales charge (load) can take $300 off the top, and yearly expenses could be .5% or more per year.  Or, if you go with a major no-load fund family, a municipal bond fund investment has zero sales charges, and yearly expenses can be as low as .15% a year.

Third, all bonds and bond funds are subject to interest rate risk.  This means that if interest rates go up, the value or price of bonds and bond funds that invest in them will fall.

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A UFOLOGY TRIBUTE TO BOB DEAN We here at WebeUFObelievers, are very honoured to pay tribute to a man highly respected in the Ufology community for his endless campaigns and contributions to Ufology and for disclosure of the ET phenomenon. That man is Robert Orel Dean, better known as Bob Dean. Bob Dean, a retired command Sergeant Major in the US Army with 27 years of service, has over 40 years of experience in the field including working for the Mutual UFO Network (MUFON) and the Centre for UFO studies (CUFOS). He became widely known for his disclosure of a secret NATO document, based on UFOs, which he had clearance to view entitled An assessment: An Evaluation Of The Possible Threat To Allied Forces In Europe. In this document, published in 1964, Bob stated it detailed 4 Extraterrestrial races that were visiting Earth at that time. That figure is said to have risen. Bobs mission is clear: To inform the world of the existence of other worldly, peaceful civilizations and our governments knowledge of them. For this we thank Bob Dean for his efforts and recognise his standing in the Ufology community has an elder statesman. The following text below is an extract from Wikipedia ——————————————————————— Robert Orel Dean (born 1929), also known as Bob Dean, is a retired Command Sergeant Major in the US Army, who became notable in UFOlogy circles after he claimed to have viewed “Cosmic Top Secret” documents detailing alien activity on …

http://www.youtube.com/watch?v=MBttOep9gB8&hl=en

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October 5th marks the first day of the 2009 Supreme Court term. Thus far the Court’s docket includes major cases concerning the First Amendment, the separation of powers, civil procedure, criminal law, intellectual property, mutual fund advisers’ fees, takings, and more. Notable cases include Free Enterprise Fund v. Public Company Accounting Oversight Board, which concerns whether a major provision of the Sarbanes-Oxley Act is consistent with the principle of separation of powers; Graham v. Florida, which concerns the constitutionality of life without parole for juvenile criminals; United States v. Stevens, which concerns the constitutionality of a federal law criminalizing certain videos and other depictions of animal cruelty; and Jones v. Harris, which asks whether a shareholder may challenge a mutual fund investment adviser’s fee as excessive under the Investment Company Act of 1940. The Court is also sure to add other significant cases when it meets for its opening conference on September 29. In addition to discussing these cases and others, the panelists will discuss Citizens United v. FEC, the case from last term involving the constitutionality of McCain-Feingold that was re-argued on September 9. Finally, the panelists will discuss the general direction of the Court, including the effect of the departure of Justice Souter and the addition of Justice Sotomayor. Featuring: Hon. Walter E. Dellinger III, of OMelveny & Myers; Prof. Orin S. Kerr of The George Washington …

http://www.youtube.com/watch?v=M5f6gEH4NBw&hl=en

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You may get bargains at the store checkout. You may get an award or “cash back” for using your credit card. You may get a store rebate. What you may not get is a low credit card interest rate because the Federal Reserve Bank keeps increasing your borrowing costs. The bench mark interest rate is known as the “prime rate When the Federal Reserve Bank raises the federal funds rate, your bank will ratchet their prime rate. Your bank’s prime rate plus a margin rate your bank charges above prime determines your credit card charges. Many consumers do not want to read the fine print of their bank’s credit card agreement. Often confused by the terms, we accept them with gratitude because we can borrow money.

You may not like or even know about Alan Greenspan or his successor. You may dislike all Republicans or harbor disdain for Democrats. Whatever your political leaning, the U.S. government helps to educate and to protect you as a credit card holder. The Federal Reserve Bank raises and lowers rates. It also educates and protects. Education diminishes fear; knowledge gives you courage. Take a look at these free resources:

*Choosing a Credit Card: http://www.federalreserve.gov/pubs/shop/default.htm

*Your Credit Report: What It Says About You: http://www.federalreserve.gov/pubs/consumerhdbk/

*Review other Federal Reserve Bank Consumer information: http://www.federalreserve.gov/consumers.htm

*Frustrated by credit card debt? The Federal Trade Commission provides educational resources: [http://www.ftc.gov/bcp/conline/edcams/credit/index.html]

When backing out of the driveway, many of us sing the ditty, “I owe…I owe…It’s off to work I go.” Driving down the highway of boredom to the office, our radios blare music and news: “Ecuador’s record banana harvest prompts the Dole Food Company to sell grocery market bananas at 19 cents a pound instead of 29 cents.” Meteorologists drone: “Hurricane Katrina bashes gasoline refineries in the Gulf.” Economists moan: “Exxon Mobil pumps up prices” (the ride to work becomes more expensive).

When the Federal Reserve Open Market Committee increases interest rates, demand for products decreases, When we have money, economic booms increase; when, as buyers, we do not have money, “For Sale” signs blow in the wind. The seven Federal Reserve Bank members bankers study how we spend, what “things” cost, and decide what is best when we buy or sell. During the past year, the Federal Reserve nudged interest rates twelve times.

The Federal Reserve’s actions are not keeping us away from store counters. We spend at a frenzied rate. As a result, U.S. citizens have the lowest savings rate in the Western world. Someday our wallets may be squeezed by higher interest rates, expensive gasoline, and home heating costs.

We can become wise customers when we understand the math and the adjectives of advertising and sales. Calculating what the store offers and what you will pay is the math of buying. The sign, “Sale! 50% off until 12 midnight” manipulates you to buy now; this is the adjective of sales. In most instances, this means you use a credit card. Wisdom seeks the shedding of all burdens while celebrating what money cannot purchase and debt cannot take away.

“A feast is made for laughter, wine makes life merry, and money is the answer for everything.” – Ecclesiastes 10:19

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Since the 1920s, mutual funds have helped Americans achieve their financial goals. Today they are one of the most popular investments. According to the Mutual Fund Education Alliance, more than 80 million investors in the United States own mutual funds.

But if you’re like most investors, you may have questions about different fund types, class shares, expenses and how to select the funds most suitable to your investment needs. You’ll find answers to these questions in this five-part series of articles about the world of mutual funds.

What is a mutual fund?

Mutual funds are often referred to as open-end funds. This means there is no limit to the number of shares investors can buy and sell. You might also hear about closed-end funds, which are investment companies that sell a fixed number of shares traded only on the stock market.

The money you invest in a mutual fund is pooled along with that of other shareholders with similar financial goals. Most mutual funds are part of a larger investment company or family of funds. Each fund is managed by a team of professional money managers who monitor the fund’s performance and, based on thorough research, choose investments they believe will help the fund reach the investment objectives stated in the prospectus (for example, current income or capital growth).

Because a mutual fund is essentially a collection of different investments, investors use them to reduce investment risk without having to purchase individual stocks and/or bonds. Diversification, while recommended, does not guarantee a profit or ensure against a market loss.

Another advantage of investing in mutual funds is liquidity. Generally, you can redeem or sell your shares any day the stock market is open. However, you should keep in mind that investment values will fluctuate and there is no assurance that the objective of any fund will be achieved. Mutual fund shares are redeemable at the current net asset value, which could be more or less than their original cost. Fund annual operating expenses apply as well as plan administration charges. These are described in the prospectus.

Stock mutual funds

If you’re considering investing in a mutual fund, you’ll need to know about the types of funds that are available. You can select a stock or equity fund, bond fund, balanced fund (a combination of stock and bond funds), lifestyle fund or money market fund. In Part Two of this series, we’ll take a look at stock funds.

Generally, stock or equity mutual funds are best suited for investors who:

o Seek capital growth over extended periods of time

o Are willing to tolerate share-price volatility

o Have an investment horizon of five or more years

Stock funds can have different investment objectives and target companies in various industry sectors and market capitalization (the gauge of a company’s size or value). Funds invest in companies within one of the three market capitalization categories: large-cap funds (more than $11.7 billion), mid-cap funds ($2.9 billion to $11.7 billion) and small-cap funds (up to $2.9 billion).

The following are the different types of stock funds, ranked in order of the highest to lowest investment risk:

Aggressive growth funds-Seek rapid growth of capital, often through investment in smaller companies and with investment techniques involving high-risk, short-selling, leveraging and frequent trading.

Growth funds-Seek capital appreciation by investing in equity securities of companies with earnings that are expected to grow at an above-average rate. Current income, if considered at all, is a secondary objective.

Growth and income funds-Seek capital appreciation and current income equally by investing in equity securities that have above-average yields and some potential for appreciation.

Income funds-Seek income rather than capital appreciation by investing primarily in equity securities of companies offering good dividends.

International stock funds-Invest at least two-thirds of their portfolios in equity securities of companies located outside the U.S. (global stocks). Domestic (U.S.) stocks may or may not be held.

Specialty funds-Seek capital appreciation by investing at least 65% of assets in equities of a single industry or sector, such as financial services, healthcare, natural resources, precious metals, real estate or utilities.

Lifestyle Funds-Invest in other funds and are optimized to reflect levels of risk and return suitable to specific times of an investor’s life.

Bond funds

As the name suggests, bond funds are mutual funds investing in various types of bonds. Bond funds may be appropriate for investors who:

o Value relatively steady income over growth

o Seek yields that are potentially higher than money market rates

o Want to diversify investments

o Can accept modest fluctuations in the share price

Bond funds aren’t the same as bonds. There’s no fixed yield nor contractual obligation to repay investors their principal at a future date, as is the case with bonds. Bond fund managers continually trade their positions, so the risk-return characteristics of a bond fund investment is always changing, just as with other mutual fund investments.

The main types of bond funds include:

Corporate bond funds-Seek a high level of income by investing two-thirds or more of their portfolios in corporate bonds.

Global bond funds-Invest in worldwide debt securities. Up to 25% of their portfolio’s securities (not including cash) may be invested in companies located in the United States.

Government bond funds-Invest at least two-thirds of their portfolios in U.S. government securities and have no stated average maturity. Bonds issued by Uncle Sam are backed by the full faith and credit of the U.S. government.

High-yield bond funds-Seek a high level of current income by investing at least two-thirds of their portfolios in lower-rated corporate bonds (Baa or lower by Moody’s and BBB or lower by Standard and Poor’s rating services).

Mortgage-backed funds-Invest at least two-thirds of their portfolios in pooled mortgage-backed securities.

National municipal bond funds-Invest predominantly in municipal bonds. The funds’ bonds are usually exempt from federal income tax but may be taxed under state and local laws.

Other world bond funds-Invest at least two-thirds of their portfolios in a combination of foreign government and corporate debt. Some funds in this category invest primarily in debt securities of emerging markets.

State municipal bond funds-Invest primarily in municipal bonds of a single state. The funds’ bonds are exempt from federal and state income taxes for residents of that state.

Strategic income funds-Invest in a combination of domestic fixed-income securities to provide high current income.

Other mutual fund investments

In addition to the stock and bond funds described in previous articles, mutual fund investing offers other choices that might be appropriate to your circumstances and goals. These choices include:

Balanced funds

These funds, also known as hybrid funds, are a combination of stock and bond funds. Balanced funds seek high total return by investing in a mix of equities, fixed-income securities and money market instruments. Unlike flexible portfolio funds, these funds are required to strictly maintain a precise weighting in asset classes.

Money market funds

Money market funds typically invest in short-term government and company loans, which, while lower-yielding, are generally less risky than many other types of funds. Money market funds can be appropriate for investors who:

o Need access to their money in the near future

o Are looking for a current short-term rate of interest

o Are very conservative in their investment approach

An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. Therefore, while the fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money while investing in the fund.

Classification of class shares

When you invest in a mutual fund, you purchase a share of that fund. There are different share classes in which you can invest, the most common of which are class A, B and C shares. Share classes vary mainly in the type of sales charge and expenses you incur. The best share class for you depends on a number of factors, including the amount you plan to invest and how long you plan to hold the shares.

Share types

o Class A shares have a front-end sales charge you pay at the time of purchase and is deducted from your investment amount.

o Class B shares typically do not have an up-front sales charge. Instead, a class B share has a contingent deferred sales charge (CDSC) that declines each year until it eventually expires. Once their CDSC expires, Class B shares convert to Class A shares.

o Class C shares do not have an initial sales charge. Rather, they also have a contingent deferred sales charge-typically 1% if shares are sold within the first year. They do not convert to Class A shares and have an ongoing, higher management fee.

Operating expenses

All mutual funds have operating expenses that may include management fees, distribution fees or 12b-1 fees and shareholder mailings, among other expenses. You do not pay for these directly. Instead, they are deducted from the fund’s net assets-or the overall return of the fund. For more information on a fund’s fees and expenses, refer to the fund prospectus.

A fund’s total expense ratio is the combination of the different operating expenses, such as advisory fees, distribution fees and ongoing fees. The fund’s expense ratio is a means to compare its cost to that of other funds and to learn about the fund’s fees and expenses.

Shareholder fees include any commissions paid to brokers when shares are bought or sold. These commissions are often described as “front-end loads” (sales charges when you buy) or “back-end loads” (sales charges when you sell). No-load funds, as the name implies, do not have front-end or back-end sales charges, but generally do have operating expenses and shareholder fees.

Taxes

Each year, mutual funds outside of an employer tax-qualified plan must distribute substantially all of their income and capital gains to shareholders. As a result, shareholders of a mutual fund generally must pay income taxes on dividends and capital gains, if any. Each fund provides an IRS Form 1099 to shareholders annually to summarize the fund’s dividends and capital distributions. Then, when a shareholder sells shares of a fund, the shareholder will realize either a taxable gain or a loss.

Determine your financial objectives

Choosing the type of investment that is right for you depends on your financial goals. Are you saving for college or your retirement? Do you need stable income or can you afford a longer-term investment with greater historical risk, but potentially higher returns? Before investing in a fund, carefully review the fund’s investment style, performance history and expense ratio, and consider your time horizon and level of risk tolerance.

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