Municipal Bond Forum
Adding to your fixed-income portfolio
Q
I already own some individual municipal bonds from you and would like to now add to my fixed-income portfolio. Should I invest in a tax-exempt muni bond fund from a brokerage firm or an individual muni bond from you? What are the pro and cons of these two?
A
James A. Klotz responds:
We only recommend bond funds for investors who are unable to achieve proper diversification with individual bonds.
We don’t think bonds need to be actively managed and the annual fees require investors to sacrifice too much income.
Another negative characteristic of bond funds is they have no maturity date. With individual bonds the principal is guaranteed at maturity.
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The responses provided in this forum are meant to address specific questions posed by investors about their municipal bonds and to provide market insight for our general audience. Please note, your investments, objectives, results and experience may differ significantly. Our answers and any potential strategies discussed should not be construed as a solicitation to buy nor sell any security or investment product. All investing entails risk.