- Home
- Bond Forum
- Looking for Specific Bonds?
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.
Municipal Bond Forum
FMSbonds, Inc.'s Bond Forum™ is an exclusive opportunity for investors to submit questions and comments on the bond market or to respond to one of our articles.
To participate, just send us an e-mail. Be sure to include your name or initials and your state of residence. Posted e-mails may be edited for length and clarity. If you prefer a private response, please note that in your e-mail. Responses are provided by James A. Klotz, president and co-founder of FMSbonds, Inc., a municipal bond specialist for more than 35 years; Dr. Jay H. Abrams, chief municipal credit analyst; and other members of the firm as noted.
Postings are listed by date. You may also view postings by topic using the search box below. If you have any questions, please call us at 1-800-FMS-BOND (367-2663) or e-mail us.
Search by topic
Taxable munis for 401k
7/12/2010I was recently laid off from Anheuser-Busch InBev after 27 years and now find myself trying to figure out what type of investment to roll my 401k into. My financial adviser recommends taxable municipal bonds as a long-term investment. That said, our friends and family think they are too risky and can't believe we would consider this type of investment. Can you shed any light on this subject?
- M.K.We agree with your financial advisor and are curious as to which investments your friends and family think are less risky.
You can purchase taxable municipal bonds of the highest quality, secured by either the taxing power of a highly rated issuer or backed by an essential revenue stream. These bonds also enjoy a 35% percent subsidy from the federal government.
Investment grade municipal bonds enjoy a much lower default rate than corporate securities and are obviously less risky than equities.
Today, you can earn approximately 7% on AAA insured taxable municipals.
Annuities vs. muni bonds
6/18/2010My compliments on your excellent article, "Avoid Headline Hysteria." I would add one supporting observation: An advisor with a nationally syndicated radio show, whom I otherwise respect, repeatedly advises his radio listeners to avoid long-term municipal bonds because their market value will decline when interest rates rise. At the same time, in the same broadcast, he will tout lifetime fixed annuities from insurance companies as a sound part of some retirement income strategies. Am I missing something here? A long-term muni bond fills the same place in the retirement portfolio as a fixed annuity, can be 100% tax free and can be sold if emergency lump-sum cash is needed or if the owner dies and leaves the bond to his heirs. A fixed annuity is entirely illiquid and is only partially tax-free. There are a menagerie of provisions for heirs, but they all reduce the return to annuitant. And those fixed annuity payments are no less vulnerable to inflation than are the bond coupon payments. AAA-rated long-term munis are available with better than 5% tax-free returns. It's hard to find a fixed annuity that does as well, and none of them offer the full return of principal at maturity that the bond does. Do I have all this right? I can't see any case where one would prefer a lifetime fixed annuity to a long-term muni bond.
- D.L., ArizonaThank you for your kind words. In answer to your question, we don't think you are missing anything in your analysis of municipal bonds vs. annuities. In fact, we couldn't agree more with your assessment.
Municipal bonds are considerably more flexible. At the risk of piling on, annuities are also one of the highest commission products in the investment marketplace, and can result in unexpected taxable events, as well as substantial penalties for early withdrawal.
Appreciates the information
6/17/2010I have been reading your articles for the last two years and I enjoy the practical, no B.S. information you provide. I have an account with your company and Patrick Gonzalez does a fine job.
- B.A., IndianaThank you for your kind words.
This report is produced solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. This report is based on information obtained from sources believed to be reliable but no independent verification has been made, nor is its accuracy or completeness guaranteed.