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Tax Free Municiple Bonds
Old 07-04-2006, 10:53 AM   #1
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Tax Free Municiple Bonds

Some Tax Free Municiple Bonds and Bond Funds have had decent 6-9% yields (Nuveen, Oppenheimer)

Does anyone use tax free muni-bonds as an income investment?

If so, how has it being going?
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Re: Tax Free Municiple Bonds
Old 07-04-2006, 10:57 AM   #2
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Re: Tax Free Municiple Bonds

Can be decent if you dont go too far into the crappy credit rating stuff, although not too many major funds have vomited up much. You do need to be in a fairly high tax bracket to really benefit. A lot of folks try to keep their tax profile low in the first place, which makes muni's less attractive.

I held some california munis for a while. My current tax situation doesnt make sense for them. I can do almost as well from a cd.
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Re: Tax Free Municiple Bonds
Old 07-04-2006, 02:57 PM   #3
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Re: Tax Free Municiple Bonds

Stay away from those leveraged bond funds that are yielding 9%. A far better bet is Vanguard's VWITX. However, I'm still in the accumulation phase, so +25% marginal tax bracket. If you're in retirement, you may be better with taxable bonds.
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Re: Tax Free Municiple Bonds
Old 07-04-2006, 03:07 PM   #4
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Re: Tax Free Municiple Bonds

I like Vanguards Muni fund as well. I'm in a high tax bracket. Current yield 4.12% but NAV is down this last year cos of rising interest rate. My personal total performance is 2.4% for 1 year, 4.6 3 years and 4.5 last 5 years.
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Re: Tax Free Municiple Bonds
Old 07-04-2006, 03:58 PM   #5
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Re: Tax Free Municiple Bonds

VWITX (Vanguard's Intermediate Term Muni) has been very very good to me. It's been a core holding since 1999.
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Re: Tax Free Municiple Bonds
Old 07-04-2006, 04:24 PM   #6
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Re: Tax Free Municiple Bonds

Quote:
Originally Posted by PsyopRanger
Some Tax Free Municiple Bonds and Bond Funds have had decent 6-9% yields (Nuveen, Oppenheimer)

Does anyone use tax free muni-bonds as an income investment?*

If so, how has it being going?*
These things can be OK, but be aware that most such funds use leverage to juice returns. Make sure you are comfy with the strategy and the concentration of risk, and watch out for high fees. If they are using auction-rate preferred stock, make sure they are using swaps or some other deriavtive to avoid a blow-up from duration mismatches.

There are also CEFs that do a similar thing with preferred stocks that spit out qualified dividend income (15% tax rate). HPF is attractive when it is available at a 10% or greater discount to NAV, for example.
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