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01-30-2012, 03:55 PM
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#21
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Recycles dryer sheets
Join Date: Sep 2011
Location: Easten Long Island
Posts: 414
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Quote:
Originally Posted by jebmke
I've held them for years but I use funds. I can't develop a compelling case to hold individual bonds. Too much work, need a lot of issues to diversify and liquidity is a problem. Especially for small portfolios.
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Seems that individual issues held to redemption can provide some protection from the NAV decline exposure of MFs and can provide a somewhat more predictable forecast of cash flow. ~$250,000 could be a reasonable average amount for a laddered muni portfolio.
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01-30-2012, 04:00 PM
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#22
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Thinks s/he gets paid by the post
Join Date: Jan 2008
Posts: 1,653
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At a high level, a rolling ladder is the same (mathematical risk) as a fund basically. These are assets I don't intend to touch for quite some time (or maybe never) -- probably 4-5x the duration of the fund.
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01-30-2012, 04:08 PM
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#23
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Quote:
Originally Posted by jebmke
At a high level, a rolling ladder is the same (mathematical risk) as a fund basically.
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I hope you have your flame proof armor on.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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01-30-2012, 04:36 PM
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#24
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Recycles dryer sheets
Join Date: Sep 2011
Location: Easten Long Island
Posts: 414
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Quote:
Originally Posted by jebmke
At a high level, a rolling ladder is the same (mathematical risk) as a fund basically. These are assets I don't intend to touch for quite some time (or maybe never) -- probably 4-5x the duration of the fund.
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If and when I need cash from this portion of my asset allocation, I prefer to have the choice of taking it from a maturing / called bond or a MF. I'm not partial to paying capital gains on tax exempt investments.
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01-30-2012, 06:42 PM
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#25
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Thinks s/he gets paid by the post
Join Date: Feb 2009
Location: Cville
Posts: 1,600
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So for those that are buying individual bonds, couple questions - how do you get through all the bonds available with questions like call provisions, cost to insure them, and keep up with developments that affect them? Just seems to be so much more to have to evaluate with thousands of bonds available.
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01-30-2012, 07:06 PM
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#26
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Thinks s/he gets paid by the post
Join Date: Jan 2008
Posts: 1,653
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Quote:
Originally Posted by justplainbll
If and when I need cash from this portion of my asset allocation, I prefer to have the choice of taking it from a maturing / called bond or a MF. I'm not partial to paying capital gains on tax exempt investments.
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Yes, a non-rolling ladder is a different animal.
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01-31-2012, 05:37 AM
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#27
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Recycles dryer sheets
Join Date: Sep 2011
Location: Easten Long Island
Posts: 414
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Quote:
Originally Posted by RetireBy90
So for those that are buying individual bonds, couple questions - how do you get through all the bonds available with questions like call provisions, cost to insure them, and keep up with developments that affect them? Just seems to be so much more to have to evaluate with thousands of bonds available.
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It helps if you consider reading The Bond Buyer a labor of love and are comfortable reading Official Statements.
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01-31-2012, 12:15 PM
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#28
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Full time employment: Posting here.
Join Date: May 2011
Location: Marco island
Posts: 815
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Quote:
Originally Posted by MichaelB
Many investors here have tax deferred accounts so they don't need munis. I don't, and munis make up my largest allocation. We hold individual bonds, muni funds and muni CEFs in similar amounts. If Ms Whitney made another scary projection about munis, and they were to fall in price, I would buy more.
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Would you buy as part of rebalancing or would you be changing your asset allocation. I've been worried about rate hikes and didn't really think of buying more if\ when that happens. Seems like a simple solution especially for those gradually shifting to a heavier bond holding, like me.
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01-31-2012, 01:49 PM
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#29
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Dryer sheet wannabe
Join Date: Jan 2012
Location: Putnam
Posts: 11
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Hi,
I am new to the forum and pretty new to investing.
I am also considering buying into some NY Muni bond Funds. Most likely through Vanguard.
My question is, can these be sold at anytime? I am still a little unsure of the rules.
Thank you
__________________
I'm not cheap. I just don't like the cars under $30k and am not willing to pay over $50k for the ones I like.
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01-31-2012, 02:54 PM
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#30
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2009
Posts: 6,682
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Quote:
Originally Posted by SaverNY
Hi,
I am new to the forum and pretty new to investing.
I am also considering buying into some NY Muni bond Funds. Most likely through Vanguard.
My question is, can these be sold at anytime? I am still a little unsure of the rules.
Thank you
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My first foray into non-retirement investing was buying into a NY Muni bond fund more than 20 years ago. It was through Fidelity.
I don't know about Vanguard, but you can usually sell shares of a muni bond fund at any time. You may face a short-term trading fee if you hold the shares less than 30 days, for example (using first-in-first-out and excluding shares bought through dividend or cap gains reinvestment). The fund's prospectus will point out any such fees and to which shares they may apply.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.
"I want my money working for me instead of me working for my money!"
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01-31-2012, 03:25 PM
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#31
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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As long as you buy bonds from an issue that represents a stable taxpaying base you are fine. Detroit GO bonds? No thanks!
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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01-31-2012, 08:45 PM
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#32
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Full time employment: Posting here.
Join Date: Nov 2008
Posts: 728
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I love muni bonds and they have been the most successful part of my portfolio. Mine have grown in value over the past few years as interest rates have dropped and bond values have gone up. I'm glad that I laddered Muni bonds instead of CDs' that are paying almost nothing while I still get a nice income off of my muni bonds. It won't last, however, I know that when interest rates go up I'll lose some of my gains but I bought them for the monthly income not to profit off of them. And, I do sleep good at night knowing I'll get my check each month.
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01-31-2012, 08:59 PM
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#33
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Thinks s/he gets paid by the post
Join Date: Jul 2011
Location: The Bay Area
Posts: 2,736
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Quote:
Originally Posted by Huston55
Still working and in high marginal tax bracket. Have 15-20% AA to muni/tax free bond funds.
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One thing I should add is that, for us, Munis are a relatively recent addition to our portfolio; in taxable accounts. Just for context, we're <5 yrs from retirement and have been moving to a more conservative AA over the past few years.
__________________
You may be whatever you resolve to be.
100% x 10% > 10% x 100%
Small pensions & SS cover essentials
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02-01-2012, 04:10 AM
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#34
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Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,586
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Quote:
Originally Posted by Gatordoc50
Would you buy as part of rebalancing or would you be changing your asset allocation. I've been worried about rate hikes and didn't really think of buying more if\ when that happens. Seems like a simple solution especially for those gradually shifting to a heavier bond holding, like me.
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Rate hikes are a concern, but I think the greater risk is still deflation, and I would increase the allocation if prices were to fall.
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02-01-2012, 03:23 PM
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#35
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Dryer sheet wannabe
Join Date: Jan 2012
Location: Putnam
Posts: 11
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Thanks everyone for their comments.
I would love to hear some more Muni comments.
From what I can gather so far, the main risks are deflation (thanks MichaelB) and rates rising.
__________________
I'm not cheap. I just don't like the cars under $30k and am not willing to pay over $50k for the ones I like.
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02-01-2012, 04:06 PM
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#36
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Dryer sheet aficionado
Join Date: Dec 2010
Location: DFW
Posts: 29
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We just had a GO muni called early (8 yrs left) that was paying 4.7%. That is one downside I didn't expect so soon although I knew it could happen. We will be looking to replace.
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02-02-2012, 06:59 AM
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#37
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,266
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All of my fixed income investments are in tax deferred accounts and I plan to withdraw from those accounts in a way that the effective tax rate will be quite low so there is no benefit to be had from the difference in interest rates between similar quality corporate bonds and munis.
IMHO, munis only make sense if they are in a taxable account and you have a high marginal tax rate and most ERs marginal tax rate is not very high.
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02-02-2012, 08:12 AM
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#38
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Recycles dryer sheets
Join Date: Sep 2011
Location: Easten Long Island
Posts: 414
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Quote:
Originally Posted by Easypick
We just had a GO muni called early (8 yrs left) that was paying 4.7%. That is one downside I didn't expect so soon although I knew it could happen. We will be looking to replace.
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My WA State GO 5% due 01/01/20 acquired 11/29/06 @ 106.388 was called on 01/01/12, resulting in a yield to call of 3.61%. YTM would have been 4.35%.
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02-02-2012, 04:33 PM
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#39
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Thinks s/he gets paid by the post
Join Date: Jul 2011
Location: The Bay Area
Posts: 2,736
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Quote:
Originally Posted by pb4uski
All of my fixed income investments are in tax deferred accounts and I plan to withdraw from those accounts in a way that the effective tax rate will be quite low so there is no benefit to be had from the difference in interest rates between similar quality corporate bonds and munis.
IMHO, munis only make sense if they are in a taxable account and you have a high marginal tax rate and most ERs marginal tax rate is not very high.
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I have munis in taxable accounts due to high marginal tax rate. What would you move munis to upon retirement when tax rate goes down? Assuming AA is maintained.
__________________
You may be whatever you resolve to be.
100% x 10% > 10% x 100%
Small pensions & SS cover essentials
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02-02-2012, 04:40 PM
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#40
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,266
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Similar quality/duration corporate bonds, you would likely end up with a better yield depending on your marginal tax rate in retirement. Compare the corporate yield * (1- marginal tax rate) to the muni yield (all else being equal).
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