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Municipal Bonds
Old 01-31-2017, 08:07 PM   #1
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Municipal Bonds

I remember reading here at one time a recommendation for the best book on Municipal Bonds. I will soon be in RMD time and would like to research these. Any reccos? Thanks
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Old 01-31-2017, 08:14 PM   #2
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"The Handbook of Municipal Bonds" edited by Frank Fabozzi. Probably MBA level material, but if you can understand it you will need no other book.
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Old 01-31-2017, 11:13 PM   #3
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I got about 542K in individual muni bonds and not own more then 3 of the same bond. my TWO basic requirements, AA rated or better and INSURED. I am getting around 4.4% return of around 23k a year.

build a bond ladder with different maturity dates
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Old 02-02-2017, 06:18 AM   #4
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" Probably MBA level material,
So pretty simple then.......seriously even CFA level is only tough because of the volume of the material.
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Old 02-02-2017, 07:50 AM   #5
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So pretty simple then.......seriously even CFA level is only tough because of the volume of the material.
I had to read most of Fabozzi's Handbook of Fixed Income Securities for an exam - not that bad

It covered muni bonds.

Go for it - I have a nice muni bond portfolio myself. Most have 5% coupons.
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Old 02-02-2017, 09:32 AM   #6
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So pretty simple then.......seriously even CFA level is only tough because of the volume of the material.
I wouldn't say the material is that hard, but "MBA level" to me means that the material presupposes that you have a fairly good grasp of fixed income fundamentals/finance. If you do not understand duration, convexity, basic financial statement analysis, etc. you will have a tough time.
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Old 02-07-2017, 10:16 AM   #7
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Thanks for the great reccos
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Old 02-15-2017, 09:27 AM   #8
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I decided to add to this thread rather than starting a new one......
I guess I need to see if they have a Muni Bonds for Dummies book. I am headed to the library later today.

I bought my first muni bond from a local broker that called me and I am trying to get more comfortable with my purchase and this broker. I've been studying the bond tools at Fidelity and I am curious why the bond I purchased does not show up on any searches but similar bonds from the same agency do show up (with different maturities and coupons). If I do a CUSIP search, it comes right up and matches the details provided by the broker.

I would be more comfortable with an outfit like Fidelity or Zion Direct, but it seems like I would not have been able to find this bond if I did not hear from this broker. What other resources are available to find bonds that meet my needs?
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Old 02-15-2017, 09:50 AM   #9
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I decided to add to this thread rather than starting a new one......
I guess I need to see if they have a Muni Bonds for Dummies book. I am headed to the library later today.

I bought my first muni bond from a local broker that called me and I am trying to get more comfortable with my purchase and this broker. I've been studying the bond tools at Fidelity and I am curious why the bond I purchased does not show up on any searches but similar bonds from the same agency do show up (with different maturities and coupons). If I do a CUSIP search, it comes right up and matches the details provided by the broker.

I would be more comfortable with an outfit like Fidelity or Zion Direct, but it seems like I would not have been able to find this bond if I did not hear from this broker. What other resources are available to find bonds that meet my needs?
Does the bond the broker sold you provide anything unique? I guess what I am getting at is so what if you can't find it, are there other bonds that you can find that could have provided equal value? Keep in mind Fidelity charges a $1 to buy a bond. Not sure what your broker charged.
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Old 02-15-2017, 09:57 AM   #10
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I have FTABX in our taxable account instead of individual muni bonds. I use it in combination with a short CD ladder, for the ~10% of NW cash we keep to avoid selling equities during a downturn. I've used FTABX lately as our CD's have matured, chasing yield a bit.

When I look at it's performance versus the return on a ladder of similar individual muni bonds, it's closely equivalent. I know that a bond fund fluctuates, whereas holding individual bonds to maturity guarantees that particular bond's return. But, a bond fund is also more liquid; which seems to fit our purpose, described above.

Am I missing something by not purchasing individual muni bonds?
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Old 02-15-2017, 10:33 AM   #11
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Does the bond the broker sold you provide anything unique? I guess what I am getting at is so what if you can't find it, are there other bonds that you can find that could have provided equal value? Keep in mind Fidelity charges a $1 to buy a bond. Not sure what your broker charged.
This bond seems to have much better yield compared to similar rated bonds with similar characteristics, but that's why I need to learn more about what I'm looking at in the bond tables. I sure don't want to ignite the individual bond vs. fund debate.......I'm using a fund for the lower ladder rungs.
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Old 02-15-2017, 10:37 AM   #12
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I've bought some bond books in the past ("The Bond Bible", some book about retiring entirely on bonds) and looked over the individual municipal bonds available at Vanguard, but never made a purchase. Each muni bond has a unique contract and terms, and I'd rather not deal with the complexity - but this could also reflect a poor online interface.

So I stick with tax-exempt bond funds and ETFs. My current favorite is Vanguard Tax-Exempt ETF ("VTEB") with a 0.12% expense ratio (Fidelity's FTABX is 0.25% annual fee).

I think those picking a fund are giving up on saving money by buying individual bonds themselves.
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Old 02-15-2017, 10:58 AM   #13
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I've bought some bond books in the past ("The Bond Bible", some book about retiring entirely on bonds) and looked over the individual municipal bonds available at Vanguard, but never made a purchase. Each muni bond has a unique contract and terms, and I'd rather not deal with the complexity - but this could also reflect a poor online interface.

So I stick with tax-exempt bond funds and ETFs. My current favorite is Vanguard Tax-Exempt ETF ("VTEB") with a 0.12% expense ratio (Fidelity's FTABX is 0.25% annual fee).

I think those picking a fund are giving up on saving money by buying individual bonds themselves.
VTEB yields 1.66% whereas FTABX yields 2.57%. That is a pretty big difference for saving just a tad on expenses.
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Old 02-15-2017, 12:36 PM   #14
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This bond seems to have much better yield compared to similar rated bonds with similar characteristics, but that's why I need to learn more about what I'm looking at in the bond tables. I sure don't want to ignite the individual bond vs. fund debate.......I'm using a fund for the lower ladder rungs.
Next time make sure you do your due diligence before you buy, not after. There are lots of reasons yield could be higher:

- Illiquidity
- maturity difference
- lower in the pecking order to get paid
- funky structure (some munis are weird to the extreme)
- callable vs. non-callable
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Old 02-15-2017, 04:20 PM   #15
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Next time make sure you do your due diligence before you buy, not after. There are lots of reasons yield could be higher:

- Illiquidity
- maturity difference
- lower in the pecking order to get paid
- funky structure (some munis are weird to the extreme)
- callable vs. non-callable
You're correct, of course and I did attempt to check as many of these boxes as my limited experience would allow. I learned a lot in the process. I guess it's a flaw in my investing style that I have to dip a toe in the water and that energizes me to do a deep dive. I went to the library today but I could not find the book you suggested (or anything similar). I submitted a request to borrow a similar manual from another branch. I got to explore our brand new high style library, too!
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Old 02-15-2017, 04:25 PM   #16
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I have FTABX in our taxable account instead of individual muni bonds. I use it in combination with a short CD ladder, for the ~10% of NW cash we keep to avoid selling equities during a downturn. I've used FTABX lately as our CD's have matured, chasing yield a bit.

When I look at it's performance versus the return on a ladder of similar individual muni bonds, it's closely equivalent. I know that a bond fund fluctuates, whereas holding individual bonds to maturity guarantees that particular bond's return. But, a bond fund is also more liquid; which seems to fit our purpose, described above.

Am I missing something by not purchasing individual muni bonds?
Brewer (or others with detailed bond knowledge) - Would appreciate any advice you might have here.
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Municipal Bonds
Old 02-15-2017, 05:15 PM   #17
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Municipal Bonds

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FWIW I have gone with no bond allocation for quite a awhile. I used CD's for my bond allocation. Last year I bought SMDMX, Fido's intermediate term fund for my state. I plan to use it for near term needs and now I'm looking at individual munis for the longer term.
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Old 02-15-2017, 06:27 PM   #18
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Brewer (or others with detailed bond knowledge) - Would appreciate any advice you might have here.
A pile of bonds in a fund is pretty much the same as bonds directly held.
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Old 02-16-2017, 04:02 PM   #19
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You're correct, of course and I did attempt to check as many of these boxes as my limited experience would allow. I learned a lot in the process. I guess it's a flaw in my investing style that I have to dip a toe in the water and that energizes me to do a deep dive. I went to the library today but I could not find the book you suggested (or anything similar). I submitted a request to borrow a similar manual from another branch. I got to explore our brand new high style library, too!
I learned that POS doesn't stand for what I thought it did...it's Preliminary Offering Statement, but I guess the meaning could be the same.
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Old 02-18-2017, 06:45 AM   #20
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I have FTABX in our taxable account instead of individual muni bonds. I use it in combination with a short CD ladder, for the ~10% of NW cash we keep to avoid selling equities during a downturn. I've used FTABX lately as our CD's have matured, chasing yield a bit.

When I look at it's performance versus the return on a ladder of similar individual muni bonds, it's closely equivalent. I know that a bond fund fluctuates, whereas holding individual bonds to maturity guarantees that particular bond's return. But, a bond fund is also more liquid; which seems to fit our purpose, described above.

Am I missing something by not purchasing individual muni bonds?
I believe the tax free status is generally limited to residents of the state issuing the bond. If using FTABX or another multi-state muni bond fund, I presume the fund company provides a table showing the composition of the fund. Is that correct?
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