Municipal Bond Forum
Do munis make sense for lower tax brackets?
Q
Do individual tax free municipal bonds also reflect a good tax-free income for someone who is in a lower tax bracket than 35% (I’m in the 28%)? I visited a broker who suggested I invest in an individual tax-free municipal bond. They charge 1% to manage the bonds. I visited your Web site and am reluctant to let his firm purchase the muni bond for me since it appears I can buy an individual muni bond through you at a lesser fee and won’t have the ongoing 1% his company would charge me. Your opinion is appreciated.
A
James A. Klotz responds:
In the 28% bracket, your taxable equivalent returns result in better yields than can be currently achieved with a taxable bond. For instance, the Puerto Rico offerings we forwarded to you are equivalent to more than 8.00% in your tax bracket.
All prices quoted at FMSbonds.com are net to the investor. There are no additional fees or costs.
We believe investors should employ a buy and hold strategy when it comes to municipal bonds. Your bonds should be purchased for the tax-free income they produce, not for potential capital gains.
We assist our clients in choosing suitable bonds to meet their investment objective of providing a steady and dependable stream of tax-free interest.
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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.