There are numerous reasons why you might choose to invest in a single stock.You might have only a limited amount of money to invest or you might be convinced that you've stumbled across the next Microsoft. These are direct-purchase plans offered by a select group of companies that let you bypass stock brokers and the size of commissions that market professionals charge when buying shares of a stock.

And earnings in 529 college savings plans and coverdell education savings accounts (ESAs) are also tax exempt if the money is used to pay qualified education expenses.

When an organization such as a religious, educational, or charitable institution, or other not-for-profit group, is tax-exempt, it does not owe tax of any kind to federal, state, and local governments.

In addition, you can take an income tax deduction for gifts you make to such organizations.1.

If you're buying only one stock, your logic flies in the face of many investment professionals.

Nonetheless, there are reasons driving both approaches, investing in a single stock or creating a diversified portfolio, which are on opposite sides of the investment spectrum.

Buying a single stock is akin to placing all of your investment eggs in one basket.Diversifying across different types of stocks or even asset classes, on the other hand, is to select financial securities that have the best chance of lowering your risk for loss and increasing your returns.Definition / Meaning of Categories: Finance, Some investments are tax exempt, which means you don't have to pay income tax on the earnings they produce. Earnings Before Interest, Taxes, Depreciation And Amortization10.For example, the interest you receive on a municipal bond is generally exempt from federal income tax, and also exempt from state and local income tax if you live in the state where the bond was issued. However, if you sell the bond before maturity, any capital gain is taxable. Similarly, dividends on bond mutual funds that invest in municipal bonds are exempt from federal income tax.