Question

10. The Millers have some money currently in an interest-bearing checking account. The Millers have $100,000 to invest. They have significant income from their investments and would like to move this money to a tax-exempt savings vehicle.

What type of savings tool would you recommend? Why?

Guys just so you know i'm looking for a tool to use and why it would be effective thank you.

Answer 1

municipal bonds

Step-by-step explanation:

If they want to invest the $100,000, the only way they can do it and avoid federal income taxes is by investing on municipal bonds. Any other type of tax free or deferred tax invested is limited to only a few thousand dollars per year.

Municipal bonds are issued by cities and even states, and their are generally very secure bonds and they are not taxed by the federal government. Depending on your state or city, they can be subject to state and municipal income taxes.