Municipal Bond Forum
Going long with no worries
Q
Your message (“The No. 1 Sin of Muni Investing“) is right on. My friends always ask me why I hold long paper. I tell them I have consistent returns of 5.00% and no worries.
A
James A. Klotz responds:
As you know, we have always encouraged municipal bond investors to buy long-term bonds to maximize their income and avoid the flawed strategy of laddering.
Investors with shorter-term laddered portfolios have experienced the frustration of continually being forced to reinvest at lower and lower rates for the last few decades. As a result, they have sacrificed 40% to 50% of available tax-free income on each purchase. Also lost are the additional dollars available for reinvestment.
I trust that a quick glance at your portfolio will change your friends’ approach to muni investing.
Start here.
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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.