|
|
How much in muni bonds and where to buy them
01-11-2012, 03:51 PM
|
#1
|
Confused about dryer sheets
Join Date: Jan 2012
Location: Eatontown
Posts: 3
|
How much in muni bonds and where to buy them
Hi everyone and thanks for the interesting site. I stumbled upon the site when trying to find more info on the purchasing of individual bonds. I am 59 and a trial attorney and have three adult children who live in different parts of the country. I also have my first grandchild who lives in Houston whereas we live in NJ. So, with the full knowledge that all plans are subject to change, my goal/hope would be to work five more years and then split time between Houston and NJ. I also have already saved about 75% of what I should need in retirement and as such have within the past year become rather conservative. Thus, my building of a muni bond portfolio.
So, my intial question for anyone is, have you ever worked with a bond guy/gal that was reasonable and bright. I was referred to Stoever Glass and from what I can tell they are legit. The other question being, is there any reason to think about using one than one bond house/broker for diversification purposes. Or, is that overkill. Lastly, SG doesn't give you the actual bond but rather a statement confirming the purchase. Kind of makes me nervous.
Thanks for any thoughts and look forward to spending some time on the site.
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
01-11-2012, 03:59 PM
|
#2
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,022
|
pb, I can't help you with a bond guy/gal/company, but your question about not getting a physical bond document made me think of this recent discussion...
http://www.early-retirement.org/foru...ame-59260.html
__________________
Numbers is hard
|
|
|
01-11-2012, 04:28 PM
|
#3
|
Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,726
|
Quote:
Originally Posted by pbvirish
Hi everyone and thanks for the interesting site. I stumbled upon the site when trying to find more info on the purchasing of individual bonds. I am 59 and a trial attorney and have three adult children who live in different parts of the country. I also have my first grandchild who lives in Houston whereas we live in NJ. So, with the full knowledge that all plans are subject to change, my goal/hope would be to work five more years and then split time between Houston and NJ. I also have already saved about 75% of what I should need in retirement and as such have within the past year become rather conservative. Thus, my building of a muni bond portfolio.
So, my intial question for anyone is, have you ever worked with a bond guy/gal that was reasonable and bright. I was referred to Stoever Glass and from what I can tell they are legit. The other question being, is there any reason to think about using one than one bond house/broker for diversification purposes. Or, is that overkill. Lastly, SG doesn't give you the actual bond but rather a statement confirming the purchase. Kind of makes me nervous.
Thanks for any thoughts and look forward to spending some time on the site.
|
Hi pbvirish, welcome to the forum. I'm not familiar with bond houses but I have heard of Stoever Glass, nothing bad. Perhaps others here can help. As to your other questions, in addition to the link REWahoo suggested, IMHO you should be more nervous holding the bond. Diversification is not a bad thing, but I would assume a bond broker will have thresholds - account sizes - that give different levels of pricing, and the diversification gained might not be as beneficial to you as better bond pricing. One way to test that is to ask the broker.
|
|
|
01-11-2012, 04:50 PM
|
#4
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2008
Posts: 13,150
|
Welcome to the site.
I know this doesn't answer the original question. But with the nervousness, how about bond funds instead of bonds? Seems like the easy route to me.
https://personal.vanguard.com/us/ins...SS&Channel=MFN
__________________
Have you ever seen a headstone with these words
"If only I had spent more time at work" ... from "Busy Man" sung by Billy Ray Cyrus
|
|
|
01-11-2012, 04:51 PM
|
#5
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,376
|
I believe it is common today for brokerages to hold bonds and stocks in the name of their clients rather than giving clients physical bonds or stock certificates.
Of course, after the MF Global debacle, I might be tentative but I think/hope that MF Global is an isolated exception and other investment house have had financial troubles and there have not been any problems with client funds and assets.
|
|
|
01-11-2012, 04:53 PM
|
#6
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2004
Location: Portland, Oregon
Posts: 7,113
|
I believe that you can see Muni bonds offered for sale on the Fidelity website during the trading day. Fidelity has a very good bond department (kept Mom away from mortgage bonds before that sector imploded). My Mother (since passed) liked to own individual bonds, including municipals. Once I needed to manage her investments I vowed to not own an individual bond unless I would be able to hold it to maturity and knew what that bond represented. Just because they are a municipal or public agency bond doesn't mean that they won't implode (you are probably to young to remember the Washington Public Power nuclear generation plant bonds.. which were nicknamed WOOPS). Also, bonds are not very liquid and the transaction fees high (imho).
I assume you are investing in Munis for tax avoidance so I suggest you look for bond funds for the states that interest you. Let the bond fund managers earn their fees by vetting the offerings. You have tax shelter and liquidity.
__________________
Duck bjorn.
|
|
|
01-11-2012, 05:08 PM
|
#7
|
Confused about dryer sheets
Join Date: Jan 2012
Location: Eatontown
Posts: 3
|
Good thought easysurfer but the problem with the funds is that they have great flucuation depending upon interest rates. By creating my own bond fund with individual muni bonds, I know exactly how much interest and income I will receive and will get my principal back if I hold the bond to maturity. The KEY is having the ability to hold the bond to maturity. I live in NJ with terrible state income tax. So, all the muni's that I have bought are tax free from both Fed and State. At this point I don't want the maturity date to be much more than 10 years and I am averaging about 4.35%. Not a bad yield tax free and for the most part without risk UNLESS the individual bond defaults which hasn't ever happened in NJ. Also, most the bonds that I have purchased are insured.
Thanks again.
|
|
|
01-11-2012, 05:10 PM
|
#8
|
Confused about dryer sheets
Join Date: Jan 2012
Location: Eatontown
Posts: 3
|
Thanks Brat... ! So, Fidelity will give you advice on individual bonds ? I believe at Vanguard, they will buy what you tell them to buy but not give advice.
|
|
|
01-11-2012, 08:30 PM
|
#9
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2004
Location: Portland, Oregon
Posts: 7,113
|
They didn't give advice on individual bonds but on a sector of bonds to avoid. The comment was obtuse but a clear message of 'not suitable'.
I understand your goals, a 10 year maturity is manageable, but that means that you must examine the underlying creditworthiness of the offering and the purpose of the bond. If you are in NJ and looking at NJ munis you are in a good position to learn the quality of the offering. Oh, just because it is a 'muni' doesn't mean that it is tax exempt. A sewer district bond is different than a stadium bond from an income taxable pov.
Your income stability concern is exactly why Mom wanted individual bonds.
__________________
Duck bjorn.
|
|
|
01-12-2012, 04:26 AM
|
#10
|
Thinks s/he gets paid by the post
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
|
Hello pbvirish - I do not know these names. I buy all my muni bonds via Edward Jones. Sorry I can't be more help.
Quote:
Originally Posted by pbvirish
I was referred to Stoever Glass and from what I can tell they are legit. The other question being, is there any reason to think about using one than one bond house/broker for diversification purposes. Or, is that overkill. Lastly, SG doesn't give you the actual bond but rather a statement confirming the purchase. Kind of makes me nervous.
Thanks for any thoughts and look forward to spending some time on the site.
|
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
|
|
|
01-12-2012, 04:53 AM
|
#11
|
Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,726
|
Quote:
Originally Posted by pbvirish
Thanks Brat... ! So, Fidelity will give you advice on individual bonds ? I believe at Vanguard, they will buy what you tell them to buy but not give advice.
|
Fidelity also has a good selection of bonds at reasonable prices and a bond desk that is quick and easy to work with. Vanguard does not.
If you are planning on holding the bonds to maturity and always reinvesting proceeds, a bond fund will do as well as the individual bonds over time, and has a few advantages over holding individual bonds. There are a number of good discussions on this at the bogleheads forum, including the math that compares the two in a rising rate environment.
|
|
|
01-12-2012, 06:39 AM
|
#12
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
|
We are able to hold all our bonds in tax-advantaged accounts like 401(k), 403(b), IRA, and Roth IRA. Thus we do not feel any need to own muni bonds.
In our taxable accounts we have only tax-efficient stock funds, so we pay virtually no taxes on our investments. And all this without owning any muni bonds.
See this article on how all this goes down: Principles of Tax-Efficient Fund Placement - Bogleheads
|
|
|
01-12-2012, 04:13 PM
|
#14
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
|
Municipal bonds are very popular on this site. However, I see a problem with them. You have to accept considerable duration to get a yield that even matches inflation. And then, you are wide open to unanticipated increases in yield.
Most of today's investors have seen very benign interest rate trends over their entire investing lives, but it hasn't always been so and it will not always be so. Spreads over treasuries are good, but not good enough to protect from a big spike in treasury yields.
Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
|
|
|
01-12-2012, 05:03 PM
|
#15
|
Dryer sheet aficionado
Join Date: Jun 2010
Posts: 27
|
pvbirish,
I am 61 and have been buying individual muni bonds for 10 to 12 years. Bond funds never interested me since I intend to hold them to maturity and did not want a fluctuation in price. Income, safety and tax free are all important to me as well. Generally buy my bonds from Edward Jones like obgyn65. Have never had a problem with any of them. Usually will buy General Obligation and insured bonds when available. Be selective and use a little common sense and enjoy tax season. I sleep pretty good at night. Good luck.
|
|
|
01-13-2012, 02:07 AM
|
#16
|
Recycles dryer sheets
Join Date: Jun 2011
Posts: 185
|
Another question on the topic of individual munis. Are we talking about buying on the secondary market or new offerings. I have never done the latter but have been interested. I guess those using Edward D. Jones are buying "new offerings"?? Vanguard only offers secondary market munis and no advice from my experience.
|
|
|
01-13-2012, 04:04 AM
|
#17
|
Thinks s/he gets paid by the post
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
|
This is my understanding too but I may be wrong.
Quote:
Originally Posted by BigE
I guess those using Edward D. Jones are buying "new offerings"??
|
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
|
|
|
01-13-2012, 07:13 AM
|
#18
|
Dryer sheet aficionado
Join Date: Jun 2010
Posts: 27
|
Quote:
Originally Posted by BigE
Another question on the topic of individual munis. Are we talking about buying on the secondary market or new offerings. I have never done the latter but have been interested. I guess those using Edward D. Jones are buying "new offerings"?? Vanguard only offers secondary market munis and no advice from my experience.
|
BigE, It is my understanding that Edward Jones makes a large purchase and then sells smaller denomations to their clients. Guess this would be new issue. I do not pretend to be an expert on muni bonds, I just know they have worked for me for many years. They have been my most solid investment other than commercial real estate. I have no ties to Edward Jones other than being a client of theirs. They have been easy to work with and freely give advice and direction and have many offices across my areas of travel. Please note that bond prices are adversely affected by inflation but if you hold until maturity nothing changes.
|
|
|
01-13-2012, 01:00 PM
|
#19
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
|
Quote:
Originally Posted by fun in the sun
Please note that bond prices are adversely affected by inflation but if you hold until maturity nothing changes.
|
Other than what you can buy with the money you receive at maturity.
Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
|
|
|
01-13-2012, 01:32 PM
|
#20
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2005
Location: Chicago
Posts: 13,186
|
Quote:
Originally Posted by haha
Other than what you can buy with the money you receive at maturity.
Ha
|
+1
Yep. Owning a bunch of 3% - 4% muni's through a decade of 5% - 6% inflation would be a bummer........ Receiving your initial cost back at maturity does nothing to improve the situation.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
|
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|