Advice from Nashville's Financial Guru Dave Ramsey
Dave Says
By Dave Ramsey
Author of Financial Peace and The Total Money Makeover
7/10/2006
"Sister has come into wealth and everyone wants it!"
Dear Dave,
My sister recently received a large sum of money through an inheritance. Now, everyone seems to have a different idea about what kind of investment she should make. The last two or three people she talked to have recommended municipal bonds. What do you think?
Rudy
Dear Rudy,
Boy, how many times have I heard this story? You get a little money and the sharks start circling.
Municipal bonds aren't the best or the worst investments you can make. They're tax-free income and their yield can be just as good, or better than corporate bonds or T-bills. But municipal bonds can be volatile just like any other kind of bond. If a city gets into financial trouble you can easily lose money in the deal.
I don't believe in municipal bonds, and I don't own any of them. I put my money in good growth stock mutual funds and growth and income mutual funds and just pay the taxes.
And guess what? I still come out ahead.
- Dave
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