Municipal Bonds: The Best Income Investment of 2014?

Municipal bonds look attractive right now. Find out why here.

Jan 12, 2014 at 10:36AM

The bond market has been a scary place to invest lately, with soaring rates causing losses in 2013. But in 2014, municipal bonds are starting to look appealing, especially to investors who can benefit from their unique tax advantages.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, discusses municipal bonds. He notes that muni bonds are in the unusual situation of yielding more than comparable Treasuries, even though Treasury bonds are taxable while munis are free of federal income tax. Despite the perceived risk from high-profile bankruptcies like Detroit, many muni bonds are backed by insurance companies, with Assured Guaranty (NYSE:AGO) and Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) among companies insuring munis right now. Dan concludes by looking at some ways to get exposure to munis, including the iShares AMT-Free National Muni ETF (NYSE MKT:MUB) and similar state-specific investments.

Another way to get income from your portfolio
Muni bonds might look smart right now, but one of the dirty secrets that few finance professionals will openly admit is that dividend stocks as a group handily outperform their non-dividend paying brethren. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.

Fool contributor Dan Caplinger owns shares of Berkshire Hathaway. The Motley Fool recommends and owns shares of Berkshire Hathaway. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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