Municipal Bond Forum
Focus on why you buy muni bonds
Q
We are New York residents. Currently, our muni bonds are decreasing in value. Since January 2013, our portfolio has lost about 3% of its value. Our advisor has instructed us to stand pat as we are still receiving dividends. What would you suggest we do?
A
James A. Klotz responds:
If you hold individual bonds rather than mutual funds, we would never suggest selling them due to market fluctuations.
We know that over the life of long-term bonds, they will sometimes be worth more than you paid for them and sometimes less. It is really irrelevant.
Municipal bonds are purchased for the tax-free income, not capital gains. If your bonds are of good quality and are from New York state issuers, they will continue to provide the steady stream of triple-exempt income for which they were purchased.
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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.