Why would one choose to buy discount rather than premium municipal bonds, acknowledging that one might need to pay tax based on the de minimis rule? This will lower the final yield.
H.S., Florida
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Why would one choose to buy discount rather than premium municipal bonds, acknowledging that one might need to pay tax based on the de minimis rule? This will lower the final yield.
H.S., Florida
In your article (“State of Issuers Aids Robust Muni Market”), you said New York and California account for about one-third of the municipal bond market. As California has announced an unexpected shortfall in tax revenues collected, is there any reason for concern over a possible default on bonds from the state?
W.H., California
I enjoyed your article on bond insurance (“Muni bond Insurance Rises, Delighting Investors, Issuers”). I wonder, how reliable are bond ratings of issuers, i.e. how much digging, financial scrutiny and due diligence is done by the rating companies in establishing the creditworthiness of a municipal bond issuer and its ability to make interest payments?
W.H., New York
Regarding your article (“Muni Bond Insurance Rises, Delighting Investors, Issuers”), is there any organization that would step in to force muni bond insurers to pay in the case of a bond failure if the insurer for any reason tries not to insure the bond? If a bond failure occurs, do the insurers pay 100% of the bond value to the holder? If so, what is the average cost of these insurance policies?
G.
I love your News and Perspectives and learn much from them. In your article, “Seek Out The Misunderstood Premium Bonds,” you said: “Remember, when buying a premium bond, every dollar invested is working at the stated yields, even the premium dollars.” Can you explain how the premium dollars are working at the stated yields?
W.M., California
I recently read about an increase in cyberattacks against local governments. Is this something to be concerned about?
D.W., California
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?
W.H., New York
I read your article, “More Muni Investors Selecting Their Own Bonds,” and would like to learn more about getting out of municipal bond funds and buying individual municipal bonds. My main concern is that if I sell the munis, their price has been hammered due to low interest rates, so I am in essence selling low and buying high. That said, I still would like to have a conversation as I could put my dividends and interest payments into individual bonds.
M.W., Ohio
When can we expect the market value of our municipal bonds to start rising? I know that we get face value when the bond comes due, but I was wondering when the value goes up.
D.J., Florida
Sorry but I do not follow your article (“What’s Concerning Some Muni Investors”). Of course, all of the smart investors sold their bonds at a profit the first of this year and then bought them back when interest rates went up. I only wish that I had done that! That would have been much smarter than to hold them. I have seen my $3 million-plus municipal bond portfolio go from being worth a premium of more than 10% to negative of about 15%.
F.G., Georgia
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