Municipal Bond Forum
Time value on municipal bonds yields
Q
I always enjoy your articles. They’re concise, informative and most interesting. With regard to “Rethinking Your Reinvestments,” as a customer of FMSbonds, my view is that going long with yields at 4.00% to 4.50% may not be advantageous. While tax-free income is desirous, one must take into account real inflation and/or the time value of money, which effectively erodes the real value of the interest payments and their purchasing power. In other words, bonds generating $450 per $10,000 today won’t have the same effective value in, say, 2048 or in 2053, etc. Can you comment on this?
A
James A. Klotz responds:
First, thank you for your kind words about our articles.
Your question is very interesting. It involves a topic that we discuss often. In fact, you prompted us to write an article specifically addressing this issue.
Please see “Tomorrow’s Value of Today’s Municipal Bond Yields.”
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.
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