Municipal Bond Forum
Should Have Stuck To Experience And Avoided Bond Laddering
Q
You are spot on with your article, “Today’s Market Especially Cruel to Bond Ladders.” Unfortunately, I did fall for the short-term trap in 2016 when I bought corporate bonds. I rolled over an IRA and felt yields were on the low end of my range so I committed 70% of my capital to bonds maturing in 12 to 20 years and deployed the other 30% in a three-year, short-term fixed annuity. I thought yields would be higher in 2019 than in 2016. Now I have those funds at my disposal but yields have fallen below the level I’m comfortable with. I should have stuck with my 30 years of experience with munis and just committed my funds as they were available. Trying to predict the future direction of rates often ends badly!
A
James A. Klotz responds:
We are always pleased to hear from friends and clients who share our philosophy.
We don’t know why some muni investors “don’t get it” and disregard their own experience.
Our clients, for the most part, recognize the futility in trying to predict the future direction of interest rates.
We’re glad you’re keeping your interest clock ticking.
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.
