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Why I Feel Most Comfortable Investing In Tax Free Municipal Bonds

Do you often dream of saving enough money to stop working?

Do you want to earn a huge tax free income to supplement your income?

Although many of you enjoy working, isn't it nice to know that you could stop working any time you want?

How can you invest to achieve some of these goals?

I know that stocks for me are often seem too risky. I found it to be very disheartening on November of 2008 when my stocks starting crashing. I thought to myself that I wish I had purchased more tax exempt municipal bonds. I got sick of the thought of saving hard my whole life and then watching my savings disappear because the stock markets were collapsing. I thought to myself that it just shouldn't be this way. I have to admit that years like 1987, 2001, 2008 made me lose some faith in the stock markets.

Why should I lose all this money, I thought, when I was a good American citizen. I worked hard with my spouse to save money and invest in American stocks. CNBC talks about stocks. The newspapers talk about stocks. Warren Buffett talks about stocks. Now they were all dropping like rocks. I guess I don't trust the stock markets anymore.

Right now, I feel that I need a large portfolio of municipal bonds. Many of these bonds are now paying around 4% completely tax exempt. I particularly like the bonds that are backed by bond insurance issued by Assured Guarantee or National (the old MBIA). That said, I bought many New York, Puerto Rico, and other municipal bonds from all around the country.

Just how much would I need to invest in tax free bonds to feel secure. Well, $1 million invested in tax free bonds would pay around $40,000 a year in tax free income. Since I want at least $120,000 a year in income (about $10,000 tax free a month), I need a portfolio of around $3 million in tax free bonds.

Some people may feel secure with more tax free income. The rule of thumb right now is to invest $1million in tax free bonds for every $40,000 a year you want in income.

$1 million = $40,000 year
$2 million= $80,000 a year
$5 million= $200,000 a year
$10 million = $400,000 a year
$100 million = $ 4,000,000 a year

Now we know how much we all need to live comfortably. So, let's start working hard and start saving.