Municipal Securities Market
Municipal securities are debt obligations issued by states, cities, counties, and other governmental entities to raise money to build schools, highways, hospitals, and sewer systems, as well as many other projects for the public good. Municipal securities are the most important way that U.S. state and local governments borrow money to finance their capital investment and cash flow needs. An important distinguishing characteristic of the municipal securities market is the exemption of interest on most municipal bonds from federal income taxes. The implicit subsidy provided by the federal government permits municipal issuers to compete effectively for capital in the domestic securities market. There is currently in excess of $2.67 trillion in outstanding municipal debt.

Treasury Securities Market
The U.S. Treasury securities market is the largest and most liquid market in the world. There is currently $7.89 trillion in outstanding marketable Treasury debt. The U.S. Treasury issues three types of securities: bills, which have a maturity of less than 1 year; notes, which have a maturity of between one and 10 years; and bonds, which have a maturity of greater than 10 years.

Federal Agency Securities Market
Federal agency debt is issued by various government-sponsored enterprises (GSEs) which were created by Congress to fund loans to borrowers such as homeowners, farmers and students. Through the creation of GSEs, the government addressed various public policy concerns about the ability of members of these groups to borrow sufficient funds at affordable rates. Most GSEs rely primarily on debt financing for their day-to-day operations. Among the most active issuers of agency debt securities are: Federal Farm Credit System Banks, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation (Freddie Mac), Federal National Mortgage Association (Fannie Mae), and Tennessee Valley Authority (TVA). There is an estimated $3.14 trillion in agency debt currently outstanding.

Corporate Bond Market
Corporate debt securities are obligations issued by corporations for capital and operating cash flow purposes. Corporate debt is issued by a wide variety of corporations involved in the financial, industrial, and service-related industries. There is approximately $6.72 trillion in corporate debt currently outstanding.

Money Market Instruments
Money market instruments include bankers acceptances, certificates of deposit, and commercial paper. Together these three instruments account for an estimated $3.9 trillion in outstanding instruments. Bankers acceptances are typically used to finance international transactions in goods and services. Certificates of deposit (CDs) are large denomination negotiable time deposits issued by commercial banks and thrift institutions, representing about $2.2 trillion. Commercial paper, which is short term unsecured promissory notes issued by both financial and non-financial corporations, is currently a $1.7 trillion market.

Mortgage Securities Market
Mortgage securities represent an ownership interest in mortgage loans made by financial institutions (savings and loans, commercial banks, or mortgage companies) to finance the borrower’s purchase of a home or other real estate. Mortgage securities are created when these loans are packaged, or “pooled”, by issuers or servicers for sale to investors. As the underlying mortgage loans are paid off by the homeowners, the investors receive payments of interest and principal. The majority of mortgage securities are issued and/or guaranteed by an agency of the U.S. Government, the Government National Mortgage Association (Ginnie Mae), or by government-sponsored enterprises such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). Some private institutions, such as subsidiaries of investment banks, financial institutions, and home builders, also package various types of mortgage loans and mortgage pools. The securities they issue are known as “private-label” mortgage securities, in contrast to “agency” mortgage securities issued and/or guaranteed by Ginnie Mae, Fannie Mae, or Freddie Mac. There is an estimated $8.86 trillion in outstanding mortgage-related securities.

Asset-Backed Securities
Asset-backed securities, called ABS, are bonds or notes backed by financial assets. Typically these assets consist of receivables other than mortgage loans, such as credit card receivables, auto loans, manufactured-housing contracts and home-equity loans. There is approximately $2.6 trillion in debt currently outstanding.

For more information, please proceed to: http://www.investinginbonds.com/MarketAtAGlance.asp?catid=31&id=78

Posted in Swiss Cleantech

THE SWISS TAXATION SYSTEM

The Swiss Taxation System is based on the country’s confederation. This explains the three different tax authorities:

Federal Taxes Taxes on earnings

Cantonal Taxes Taxes on earnings and capital, church taxes
(These taxes are different from canton to canton)

Municipality/City Taxes on earnings and capital, church taxes
(These taxes are different from town to town)

The Federal tax authorities do not grant any special privileges so that Swiss-business and foreign-business companies pay the same taxes. However, holding companies are an exception if they hold participations of a minimum of 10 % or of at least CHF 1.000.000
(no capital gain).

ZUG – TAXATION SYSTEM WITH SPECIAL PRIVILEGES

As you have learned in the former chapter, a company pays also taxes to the canton and the municipality. Since the local government of the canton of Zug has started to attract foreign companies by low taxation, innumerable international companies settled down. And one can say, that by doing this all these companies supported the decision.

The canton of Zug divides the Companies into four different taxation classes:

Regular trading company

The regular trading company is the type of company which is at the disposal of national businessmen operating a trading, manufacturing or service enterprise.

NO TAX RELIEF

Holding company

Holding companies are enterprises whose principal object consists in the holding of participations in other companies. In contrast to the canton of Zurich for example, the canton of Zug does not require a holding company to be operated as a pure investment company and it is sufficient if the majority of the assets consists of participations and the earnings largely come from the profits on participations. (mixed holding company)

TAX RELIEF on capital and reserves NO TAXES on earnings

Domicile companies

Domicile companies are firms which have only their residence (domicile) in the canton of Zug. They may not be outwardly active in Switzerland, i.e. they are not permitted to take on staff of their own nor run their own offices nor start any commercial activities in Switzerland. However, they are freely permitted to do this in other countries. The domicile company is suitable for any kind of business activity, e.g., commerce, the turning to account of patents, the administrations of assets, realty operations

TAX RELIEF on capital and reserves NO TAXES on earnings

Mixed company

Mixed companies are enterprises under foreign control for which the form of a domicile company is not appropriate for business reasons. This company may have its own staff and offices and carry out transactions in Switzerland. The income from Swiss sources will be taxed fully. For the income from foreign countries you pay taxes for the administration only. For these kind of companies you get easily a tax-ruling.

TAX RELIEF on capital and reserves TAX RELIEF on foreign source earnings

ALL TAXES AT A GLANCE

FEDERAL TAXES CANTONAL AND LOCAL TAXES OF ZUG

Regular trading company

capital: 0 % 0.05 %
earnings: 8.5 % of profit before tax
min. 4 % up to CHF 100.000 profit
max. 7 % over CHF 100.000 profit

Holding company

capital: 0 % 0.0075 % of the equity min. CHF 150.–

earnings: Holding deduction tax free
no capital gain on investments over 1 million or 10 % participations
Domicile company

capital: 0 % 0.0075 % of the equity min. CHF 150.–

earnings: as regular trading company tax free
Mixed company

capital: 0 % 0.15 %

earnings: as regular trading company
Swiss source earnings: as regular trading company

Foreign source earnings: tax ruling example
25 % thereof: as regular trading company
75 % thereof: tax free

Attention:

The above mentioned rates for the cantonal and communal taxes have to be multiplied by the Proportion of the Cantonal and Local forcast budget, which should be covered by the tax revenues, which usually amounts to 1.55 +/- 0.2

For more information, please visit:

http://www.my-swiss-company.com/

Posted in Swiss Cleantech

There are several ways to invest in bonds, including purchasing individual bonds or investing in bond funds or unit investment trusts.

Individual Bonds
There is a wide variety of individual bonds to choose from in creating a portfolio that matches your investment needs and expectations. Most individual bonds are bought and sold in the over-the-counter (OTC) market, although some corporate bonds are also listed on the New York Stock Exchange. The OTC market comprises securities firms and banks that trade bonds; brokers or agents, who buy and sell bonds on behalf of customers in response to specific requests; and dealers, who keep an inventory of bonds to buy and sell.

If you’re interested in purchasing a new bond issue in the primary market (when it is first issued), your investment advisor will provide you with the offering document, official statement or prospectus. You can also buy and sell bonds in the secondary market, after they have already been in issued in the primary market.

Usually, bonds sold in the OTC market are usually sold in $5,000 denominations. In the secondary market for outstanding bonds, prices are quoted as if the bond were traded in $100 increments. Thus, a bond quoted at 98 refers to a bond priced at $98 per $100 of face value, which equates to buying a bond with a face value of $5,000 for $4,900 (or at a two percent discount).

Bond prices in the secondary market normally include a markup, which consists of the dealer’s costs and profit. An additional commission may be added if a broker or dealer has to locate a specific bond that is not in its inventory. Each firm establishes its own prices, within regulatory guidelines, which will vary depending upon the type of bond, size of the transaction, and service the firm provides.

Bond Funds
Bond funds, like stock funds, offer professional selection and management of a portfolio of bonds for a fee. Through a bond fund, an investor can diversify risks across a broad range of issues and opt for a number of other conveniences, such as the option of having interest payments either reinvested or distributed periodically.

Some funds are designed to follow a market, in general or a specified index of bonds. These are often referred to as index or passive funds. Other funds are actively managed according to a stated objective, with bonds purchased and sold at the discretion of a fund manager. In contrast to an individual bond investment, a bond fund does not have a specified maturity date because bonds being added to and eliminated from the portfolio in response to market conditions and investor demand. With open-end mutual funds, an investor is able to buy or sell a share in the fund at any time at the fund’s net asset value. Because the market value of bonds fluctuates, a fund’s net asset value will change to reflect the aggregate value of the bonds in the portfolio. As a result, the value of an investment bond fund may be higher or lower than the original purchase price, depending upon how the underlying portfolio of bonds has performed. Alternatively, closed-end mutual funds have a specific number of shares that are listed and traded on a stock exchange. The price of closed-end funds will fluctuate not only with the price of the underlying portfolio, but also the supply and demand of the shares of the fund, and so may be priced at, above, or below the net asset value of the fund’s holdings. Because the fund managers are less concerned about having to meet investor redemptions on any given day, their strategies can be more aggressive. Exchange-traded funds, or ETFs, are similar to closed-end funds, but have transparent portfolios and are generally passively managed.

There are numerous sources of bond fund information available, including personal finance magazines and the internet. Fund research firms also provide detailed analyses by subscription to which many libraries subscribe. In addition, rating agencies also evaluate bond funds for credit and safety.

Most funds charge annual management fees while some also impose initial sales charges or fees for selling shares. When taken into account, fees and sales charges will lower overall returns, so investors need to be aware of total costs when calculating expected returns. Many funds also require a minimum initial investment.

Like individual bonds and other investments, bond fund investments entail risk. Investors should not automatically conclude that a fund offering a higher rate of return or income is better than a fund offering lower rates of return or income. Investors need to be aware of several factors, including the total costs, credit quality, manager quality, risks and the ability to exit these funds before making investment decisions.

Money Market Funds
Money market funds refer to pooled investments in short-term, highly liquid securities. These securities include short-term U.S. Treasuries, municipal bonds, certificates of deposit issued by major commercial banks, and commercial paper issued by corporations. Generally, these funds consist of securities and other instruments having maturities of three months or less. Money market funds may offer convenient liquidity, since most allow investors to withdraw their money at any time. The minimum initial investment is usually between $1,000 and $10,000.

Bond Unit Investment Trusts
Bond unit investment trusts offer a fixed portfolio of investments in government, municipal, mortgage-backed or corporate bonds, which are professionally selected and remain constant throughout the life of the trust. One of the benefits of a unit trust is that you know exactly how much you will earn while you are invested because the composition of the portfolio remains stable. Since the unit trust is not an actively managed pool of assets, there is usually no management fee, but investors do pay a sales charge, plus a small annual fee to cover supervision, evaluation expenses and trustee fees. The minimum initial investment is usually between $1,000. As an investor, you can earn interest income during the life of the trust and recover your principal as securities within the trust are redeemed. The trust typically ends when the last investment matures.

For more information, please proceed to http://www.investinginbonds.com/learnmore.asp?catid=4&id=5

Posted in Swiss Cleantech