Invest in Triple Tax-Exempt Mutual Funds

Making the choice to invest in triple tax-exempt mutual funds is a clever way to invest your money without paying taxes on the returned interest. If you're looking to invest in mutual funds that offer lower return rates and tax benefits, triple tax-exempt funds are your best bet.

Understand Your Investment

Get to know your mutual fund. Triple tax-exempt mutual funds are often composed of municipal bonds that are exempt from city, state and federal taxes.

Know whether or not this unique option is truly right for you. The tax-exempt quality is perfect for investors in upper or middle tax brackets who need tax breaks on their investments.

Understand that although storing your money in these funds might make sense in the short term because of the immediate tax advantages, the yields provided by committing to long-term investments are much greater.

Make the Investment

Log on and go to the homepage of the company you have selected to handle your investment.

Read the prospectus for each mutual fund you are interested in. Note any fees associated with your investment that could take away from your gains.

Determine whether you can open an account online or whether it has to be done by mail or through a broker. Again, note that you will typically incur additional fees when working with a broker.

Fill out the proper applications to purchase your mutual fund and submit the forms. Keep a duplicate copy for your records.

Narrow Your Search

Determine the type of mutual fund that you want to invest in. Several companies offer triple-tax exempt options, so start by determining if you want a fund that will let you invest on your own or if you will enlist the assistance of a broker.

Check with friends and fellow investors to obtain referrals regarding triple-tax exempt funds.

Tips & Warnings

• Do your research. Triple tax-exempt mutual funds are a unique form of investment and don't provide a substantial rate of return. Only invest in this type of mutual fund if you're certain it's right for your financial situation.
• Keep excellent records. Gains from mutual funds are usually taxable so be certain your accountant is aware of the special status of your funds.