Municipal Bond Forum
California expected to honor its debt obligations
Q
I live in California and all of my investments, $400,000, are in long-term California muni bonds for income and easy transfer to my daughter. I’m concerned that all of my eggs are in the basket of California. Should I spread my bond purchases into other states in case California runs into financial difficulties?
A
James A. Klotz responds:
We expect California to be able to honor its bonded debt responsibilities. Under the state Constitution, this obligation ranks second only to education as a payment priority.
California state taxes are very high on out-of-state bonds. Your alternatives would be U.S. territories such as Puerto Rico, etc.
Start here.
Do you have specific criteria for bonds you’re looking for? Let us know and we’ll e-mail you bonds that fit your needs. There is no charge for this service.
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.