Municipal Bond Forum
The simple truth of muni investing
Q
Why do you suppose investment specialists don’t recommend munis as an investment option? Do they think they’re only for the rich? I have been investing in tax-free bonds for 30 years and have done quite well in the process. When I was younger, I held my money in CDs. After a few years of paying additional income tax on the interest, I decided there must be a better way. I saw an ad in the business section of the paper and have never looked back.
A
James A. Klotz responds:
We have always believed that financial advisors often avoid recommending municipal bonds because buying and holding them to earn a steady stream of reliable tax-free income is just too simple.
They recognize that many investors, such as yourself, will become aware of the advantages of not having to deal with the volatility in other markets and will learn they don’t need the “expertise” of a financial analyst at all to achieve their investment goals.
Think about it. If financial analysts only recommended buying and holding tax-free municipal bonds, how long would investors continue to pay them a fee to do so? They would effectively be putting themselves out of work.
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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.