| I know. I know. They are a "safe" investment and | | | | Each year the local politicians have seen the |
| there isno income tax due on them, BUT.... | | | | extramoney and spent it, but they have also |
| Pay attention or you could lose your retirement | | | | done something reallystupid. They have taken on |
| cash. | | | | long term projects that have paymentsdue for |
| The broker will not tell you what you will read | | | | many years hence because they thought home |
| below. | | | | priceswould continue up.. |
| Let's first check what was paid for the bonds. | | | | What happens when home prices fall due to a |
| Ask thebroker for a quote on the face amount | | | | slowingeconomy and people being laid off who can |
| of your certificate. Mostpaid par which is the | | | | no longer maketheir mortgage commitments? |
| amount listed on the face of the bond,usually | | | | What happens when homevaluations are lowered |
| $100 or $1,000 denominations. Mr. Investor bought | | | | instead of raised? What happens whenthey don't |
| 10bonds at $1,000 each or a $10,000 bond plus | | | | have enough to pay the dividends on the bonds? |
| some commission. | | | | Two things: 1. Cut services. 2. Default. Either |
| That's fine, but what is that bond selling for | | | | choice isnot pretty, but the second is disastrous |
| today? | | | | for the bondholder. |
| $10,000? More? Less? | | | | Before that happens word will be out and many |
| They will vary in price from day to day as bonds | | | | bondswill be sold, but NOT at the face amount of |
| aretraded just like stock, but they don't usually | | | | the bond. They willstart to decline as folks are |
| have the wideswings that stocks do. Most people | | | | willing to take less. $9,000? $8,000? |
| don't worry about theseminor variations as all | | | | $7,000? Who knows. |
| they want is the steady tax-free income. | | | | The only solution is to be one of the first ones to |
| Depending on where you live that is about to | | | | sell - |
| changeand it could be in large amounts. | | | | Like NOW. |
| Where does the money come from that is paid | | | | This may not happen in your community. Has the |
| to thebondholder? Taxes and fees assessed by | | | | investorchecked to see what his local leader has |
| the county or state. | | | | committed him for? |
| About 70% to 80% of the income for counties is | | | | Bondholders have to start their due diligence to |
| fromreal estate taxes. As property is built that | | | | protect theirinvestments. |
| adds more revenue. | | | | If bonds are going down then don't wait for them |
| Here is the kicker. | | | | to golower. Take a small loss now because it will |
| Each year the County Assessor (or whatever | | | | be a big loss by theend of next year. |
| you call himin your neck of the woods) revalues | | | | The only safe place is U.S. Treasury Bills. They |
| the homes and during recentyears the tax bill has | | | | don'tpay much, but they will pay all at any time |
| increased mightily. | | | | you want the cash. |