Looking at municipal bonds..

You may want to consider municipal bond funds rather than specific bonds in order to spread the risk around. There are funds for specific states so that you get state and federal tax benefits. On the plus side municipal bonds are paying fairly decent interest rates (for the times) and they are tax free. The tax free status makes them a bad fit for 529s and retirement accounts, though. On the negative side if we ever get into inflation the value of bonds will fall. Also, if we are headed for a recession there could be some defaults. Even in the Great Depression the rate of default wasn't terrible, though.

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Seems like a safe bet with a modest return, roughly 5%. my wife is adamant about not putting money into a 529 or annuity, do to the risk, for the kids college so I started looking at other options and discovered these. It appears this is a tax free investment? What are other pros vs cons.

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If a diversified tax exempt high yield fund is yielding 2.78% I don't want to see the 5% bonds. Or are we talking potential total return on an asset class that is close to its floor on SEC yield??? Personally, I have not added to tax exempt since Meredith Whitney was blowing her pie hole at full tilt regarding muni's, but she did help create some opps. Fixed income investing is difficult now, maybe some Ibonds could be part of your plan as no potential loss of principal???

We are both uneducated in finances beyond balancing the check book. That's why I was smart enough to come here!!

As far as being over opinionated.......you can tell her cause I sure as heck 'ain't. You ever tried to tell a dago to shut her trap?!?!?!?!

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As far as being over opinionated.......you can tell her cause I sure as heck 'ain't. You ever tried to tell a dago to shut her trap?!?!?!?!

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Just link her to this thread. I was being as nice as possible when I chose my words.

Her random opinions will cost you a lot of money. A 529 account is probably the best way to go. Go print off the definitions of a 529 account and then ask her why she thinks they are "risky". after that, "ease her fears" by pointing out that she doesn't understand what it is.

Like Flask said, you both need to read up on 529 plans. They are amazing for college savings, and you should really think about doing them.

However, if your wife is adamant about not doing a 529 plan, I would look at doing a permanent life insurance policy on your child over investing in a municiple bond from one of the big 3 companies. They are less risky than municiple bonds, have a better return, and offer a ton more flexibility.

First and foremost, really read up on all the options, because there is really no reason to be against 529 plans for their risk.

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Seems like a safe bet with a modest return, roughly 5%.

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To add to what has already been said, yes 529 plans are great options for education savings.

This is a very dangerous assumption. There are obviously 2 ways I see it invest in munies and that's through funds or buying bonds directly.

Option A. Funds- allow you diversify your risk in terms of maturity, credit rating, Interst rate sensitivity, duration risks, etc. however you aren't "garunanteed" repayment of initial invested capital

Option B. individual Muni bonds- pro- you are "garunanteed" payment of face value of the bonds so long as they don't default.

Con - you can not diversify your risk appropriately in terms of interest rate, credit, and duration with limited knowledge. I would stick to shorter term duration bonds right now that would reduce your duration and interest rate risk

Best advice: use a 529 plan, diversify your holdings between some laddered duration bonds, conservative mutual funds, and may be a few equity index funds. You have at least a 10 year time horizon and I promise you college tuition is rising a hell of a lot faster than the Interst rate you get from bonds. The rate difference between a dividend paying Johnson and Johnson vs. a bond has never been more compelling towards stocks.

Maturity...