"Finance Girl" <finance_girl[at]gmail.com> wrote in message
news:2_oeh.294$_55.29[at]trndny09...
- quote -

Which risk are you adverse to? Principal risk, inflation risk, deflation
risk, currency risk, credit risk, volatility risk or some other risk? The
current top federal tax bracket is only 35%, so muni AAA 3.5%/(1-.35) =
5.385% taxable. In the 15 % bracket you only get 3.5%/(1-.15) = 4.118 %
taxable. In a high income tax state you get better taxable equivalents for
that state's muni paper. US treasury issues are not subject to state income
taxes.

AAA paper today may not be AAA 5 or 10 years down the road. If you don't
fully understand why any bond has a higher yield than the same maturity US
Treasury issue, you shouldn't own it.

For the long term investor equities outperform bonds.

I am a risk averse investor and I am thinking if government bonds are the
the right investment for me.On Charles schwab they say that the yield of AAA
munis is Yield/1-0.396 . It comes out to approx 8.5 % if the rate offered
in the market for a Muni is 3.5%.I have two questions.

1.Is it true?
2. Are there any goverenment bonds with a higher yield?

Shruti