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Taxable Equivalent Yield

Taxable Equivalent Yield

Taxable vs. Tax-Exempt Yields

If the municipal bond was issued by the state in which you live, the interest is normally free of state taxes. Although the interest income may be tax-free, any capital gains will be subject to taxation.

Municipal bonds are sold by cities, counties, states and other political bodies (public hospital, school district).

The federal government and its agencies do not sell municipal bonds. However, most municipal bonds are free of federal income taxes, although they may be subject to the alternative minimum tax. Because of this, the stated interest rate on municipal bonds is typically lower than comparable non tax-exempt bonds.

How much would you have to receive from a taxable bond to realize an equivalent yield? You can find the answer by entering the following information:

The results below show the rate of return you would have to receive from a taxable investment to have the same after-tax income as you would from a tax-exempt alternative, such as a municipal bond. The higher your federal income tax bracket, the greater the taxable return required to make your after-tax income the equivalent of a tax-exempt investment.

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Your Results
Description Amount
The yield on the municipal bond you are considering: 0%
Your federal income tax bracket: 0%
A comparable taxable bond of equivalent risk would have to yield: 0%

Note that in some states you will have to pay income tax if you buy bonds that have
been issued by other states. In addition, while municipal bonds are not subject
to federal income taxes, they may be subject to federal, state, or local alternative
minimum taxes. If you sell a tax-exempt bond at a profit, there are capital gains
taxes to consider. The principal value of bonds fluctuates with market conditions.
Bonds redeemed prior to maturity may be worth more or less than their original cost.
This hypothetical example is used for illustrative purposes only. Results
do not reflect the actual performance of any particular investment vehicle.

This chart shows the taxable yield you would need to achieve at your tax rate to
generate after-tax income equivalent to that of a tax-free vehicle.

Tax-Exempt Yield vs. Taxable Yield

Note that in some states you will have to pay income tax if you buy bonds that have
been issued by other states. In addition, while municipal bonds are not subject
to federal income taxes, they may be subject to federal, state, or local alternative
minimum taxes. If you sell a tax-exempt bond at a profit, there are capital gains
taxes to consider. The principal value of bonds fluctuates with market conditions.
Bonds redeemed prior to maturing may be worth more or less than their original cost.
This is a hypothetical example intended for illustrative purposes only. Results
do not reflect the actual performance of any particular investment vehicle.



Savings Accumulation

Savings Accumulation

How Much Money Are You on Track to Save?

If you currently have a savings plan in place, it’s important to know how much money you are on track to accumulate. As the saying goes, if you don’t know where you’re going, any road will take you there. Regardless of whether you’re saving for a long-term goal such as retirement or for a short-term goal such as a family vacation, it’s important to have a dollar figure in mind. This calculator is designed to help you estimate the future value of your current savings.

 

Will you accumulate enough savings to reach your goals? You may need to reexamine
your savings plan and make some adjustments. You can change some of the variables
to see how much savings you would accumulate under different scenarios.

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Your Results
Description Amount
Total value of current savings: $0
Anticipated additional savings each year: $0
Total savings accumulated at end of period: $0

This chart shows the estimated savings accumulation using the after-tax rate of return you selected. Are you satisfied with the savings accumulation illustrated on the graph? If not, you may want to consider increasing the amount you save or decide whether you can afford to invest your savings more aggressively. If you want to accumulate more but aren’t sure how, we can help you develop a savings program that could help you bring your goals within reach.

Estimated Year by Year Savings Accumulation

The information provided is not specific investment advice, a guarantee of performance, or a recommendation.
Rates of return will vary over time, particularly for long-term investments. Investments
offering the potential for higher rates of return also involve a higher degree of
risk.



Savings Goals

Savings Goals

Are You on Pace to Meet Your Savings Goals?

Setting a goal is a crucial step in meeting your savings objectives. Do you have
specific savings goals, or are you merely hoping you’ll have enough when the need
arises?

This calculator is designed to help you determine how much you need to save
each year to meet your savings goals.

 

Are you able to save the annual amount needed to pursue your targeted savings goal? If not, you may need to reexamine your savings plan and make some adjustments. You can change some of the variables to see how they affect your results.

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Your Results
Description Amount
Total value of current savings: $0
Number of years you have to save: 0 years
After-tax rate of return you expect on your investments: 0%
Annual savings required: $0

Are you satisfied with your savings accumulation? This graph shows the amount you
would have to save each year to meet your goal at various rates of return. But remember
that one of the most important steps you can take to work toward your goals is to
avoid procrastination. Start saving for your goals today.

Impact of Rate of Return on Annual Savings Required

The information provided is not specific investment advice, a guarantee of performance, or a recommendation.
Rates of return will vary over time, particularly for long-term investments. Investments
offering the potential for higher rates of return also involve a higher degree of
risk.



College Funding

College Funding

How Much Will Your Child’s Education Cost?

According to The College Board, in 2021-2022 the average total charges, including tuition and fees and room and board, at public four-year institutions, were $22,690 (in-state) and $39,510 (out-of-state), and $51,690 at private non-profit four-year institutions.

Saving enough for their children’s education is a major financial concern for many
parents. With the current cost of a four-year college education reaching six figures
in some instances, your child’s college education may cost more than you expect.
This calculator is designed to help you estimate the cost of your child’s education,
based on the variables you input.

According to The College Board, over the past 10 years, the inflation rate of college tuition has been double the rate of general inflation, as measured by the CPI.

Keep in mind that the age of your child may influence how you invest and the potential return on your savings and investments.

These results show the total cost of four years of college for your child and the amount you would have to save year by year — or the lump sum amount you would need now — at the rates of return and inflation you specified. Be aware that the sooner you begin the more manageable the amount you need to save each year. Return to the input page and increase your child’s age by one year to see the cost of waiting a year to begin your college funding plan.

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Your Results
Description Amount
Total cost of your child’s education (in future dollars): $0
Amount needed to save each year to cover the costs: $0
Lump sum needed including the amount you have already saved to cover future college
costs: (If you had a lump sum of savings today and were able to realize your expected
rate of return, you would not need to put away additional funds.) 		$0

Are you on target to meet your college savings goal? One of the factors that will
determine if you reach your goal is whether the earnings on your college fund meet
your expectations. This graph shows how much you’ll accumulate if your college fund’s
earnings meet your expectations or fall below your expectations by 2 percent. You
may be surprised by the effect of a mere 2 percent difference in your expected rate
of return. Total accumulated if earnings fall below your expectations by 2 percent:
$0.

Growth of College Savings

The information provided is not specific investment advice, a guarantee of performance, or a recommendation.
Rates of return will vary over time, particularly for long-term investments. Investments
offering the potential for higher rates of return also involve a higher degree of
risk. For simplicity the effects of taxes, fees, and expenses are not considered
in this illustration and would reduce the results shown if they were.