" Probably MBA level material,
So pretty simple then.......seriously even CFA level is only tough because of the volume of the material.
So pretty simple then.......seriously even CFA level is only tough because of the volume of the material.
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.
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.
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
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.
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 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?
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?
Right.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?
I guess I get a little uncomfortable at the idea of single state funds. If you look at some of the high income tax states, many of them have kind of shaky finances (IL, NJ, CA, etc.). These are credits I don't want to load up on. So in the interest of diversification, it isn't a horrible idea that you would buy out of state munis to save on the federal income taxes and forgo the state tax exemption.