Safe and Popular Investments for Building a Bright Future

June 06, 2010, By Steve Thompson 0 comments

Family men have to think about the future as well as the present. What happens when the kids need braces? Or go to college? And at some point, you'll have to tackle that leaky porch roof. It pays to maintain at least a moderate amount of liquidity on hand, but safe, low-risk investments are an excellent way to prepare for future expenses. Municipal bonds (munis) are one popular option.

Of Investments and Insurance

Munis have developed a somewhat negative reputation in this economy, according to USA Today, because of the problems investors have encountered with the companies that insure municipal bonds. You can feel confident investing in municipal bonds if your money is insured against potential loss.

The problem is that the insurers have experienced their own hardships related to the down economy, resulting in universal distrust of munis themselves. After all, if the insurance can't guarantee your money, how can you expect the city government or utility company to make good on your investment?

However, USA Today columnist Matt Krantz assures investors that municipal bonds are as safe as ever. They are popular investments for men who like low-risk options to prepare for the future, and they are also a great way to contribute to the community, whether you're buying locally or nationally.

Research Quality

It is always a good idea to stick with high-quality municipal bonds from trusted sources, advises the New York Times. You might have to conduct a bit more research if you aren't relying on insurance to protect your investment, but it's worth the time and energy.

Well-funded utility companies, for example, such as those that provide power and water, are a great place to start if you want to invest in municipal bonds. The same goes for the governments of cities in which the economy hasn't taken as much of a toll, such as Dallas. Look for sources you can trust.

There are plenty of ways to research municipal bonds, and many investment firms have ratings systems that you can use to evaluate munis. Consider turning to Standard & Poor's or the Fitch Ratings to determine how specific municipal bonds have fared in the past.

Look at the credit ratings of specific governments as well. Just as the bank would evaluate your credit score if you were asking for a loan to build a house, investors should consider credit when buying municipal bonds. If the government or other entity doesn't have a solid credit rating you are better off running in the other direction.

No Investment is Safe

You've probably heard someone say that you should never lend or invest any money that you can't afford to lose, and this holds true for municipal bonds. Don't bet the farm even if you've conducted six months worth of research. Any investment can result in a loss given the right (or wrong) circumstances.

Diversification of investments is a solid strategy for men who want to make their futures brighter but realize that they have responsibilities now. It is never a good idea to empty your bank account regardless of who advises you of a win-win opportunity.