Buying bonds today...Help!

[lawman]

Never bought bonds before but today is the day..I have identified a municipal bond that is tax free for me. It matures 06/01/2023. It pays 2.806% YTM. It is rated A1..

Is this a good deal? What is my risk of default?
Thanks

 

[COcheesehead]

The yield is good in comparison to other similar duration bonds. The default risk is .11% for all A rated muni’s.
I commend your actions, but I question your methodology. There are rate charts updated daily as a point of comparison. So you should know if it’s good yield or not. There are also other factors to consider when buying a bond. Have you read the material events? Is it insured? Callable? General obligation? Do your homework. You’ll only get better.

 

[lawman]

The yield is good in comparison to other similar duration bonds. The default risk is .11% for all A rated muni’s.
I commend your actions, but I question your methodology. There are rate charts updated daily as a point of comparison. So you should know if it’s good yield or not. There are also other factors to consider when buying a bond. Have you read the material events? Is it insured? Callable? General obligation? Do your homework. You’ll only get better.

It is callable which doesn't concern me much. Have no idea how to investigate the other things you mention..
I don't see that mentioned in the 3 page details that I printed from my Schwab account bond screen on this bond.

 

[COcheesehead]

It is callable which doesn't concern me much. Have no idea how to investigate the other things you mention..
I don't see that mentioned in the 3 page details that I printed from my Schwab account bond screen on this bond.

I don’t use Schwab, but at Fidelity if I click on the bond all the details come up including a link to the EMMA website where all the documents related to the bond are stored.

In 3 pages Schwab doesn’t tell you if it’s insured, a GO bond, etc?

Fidelity tells you if it’s on credit watch, ratings upgrade, downgrade, call dates, if prefunded, third party pricing….

Here’s EMMA
https://emma.msrb.org/

 

[lawman]

I don’t use Schwab, but at Fidelity if I click on the bond all the details come up including a link to the EMMA website where all the documents related to the bond are stored.

In 3 pages Schwab doesn’t tell you if it’s insured, a GO bond, etc?

Fidelity tells you if it’s on credit watch, ratings upgrade, downgrade, call dates, if prefunded, third party pricing….

Here’s EMMA
https://emma.msrb.org/

I'm sure Schwab has the same info available..I just don't know what I'm doing.Is there more IMPORTANT stuff I need to know other than what I've listed?

 

[COcheesehead]

I'm sure Schwab has the same info available..I just don't know what I'm doing.Is there more IMPORTANT stuff I need to know other than what I've listed?

Here’s good place to start.

https://www.fidelity.com/fixed-income-bonds/individual-bonds/municipal-bonds

 

[lawman]

Also, I am being charged $1.00 per $1000.00 purchase..Is that standard?

 

[COcheesehead]

Also, I am being charged $1.00 per $1000.00 purchase..Is that standard?

That’s the commission. They also make money on the spread.

 

[jazz4cash]

If you post the CUSIP # for the particular issue you may get more detailed replies. I personally prefer to go for A2 at a minimum in case of a downgrade. I also try to understand (or think I understand)the purpose of the bond. I bought a county housing agency bond that was tied to a particular apartment complex but I checked out the neighborhood first. Nothing wrong with dipping a toe until you are more comfortable.

 

[lawman]

If you post the CUSIP # for the particular issue you may get more detailed replies. I personally prefer to go for A2 at a minimum in case of a downgrade. I also try to understand (or think I understand)the purpose of the bond. I bought a county housing agency bond that was tied to a particular apartment complex but I checked out the neighborhood first. Nothing wrong with dipping a toe until you are more comfortable.

Just realized I said it was rated A1...It is A+.. Is A2 a higher rating than A+

 

[njhowie]

Please post CUSIP so we can have a look-see.

Thanks.

 

[njhowie]

Is A2 a higher rating than A+

A2 is equivalent to A, one notch lower than A+. A1 is equivalent to A+.

https://www.fidelity.com/learning-center/investment-products/fixed-income-bonds/bond-ratings

 

[lawman]

Please post CUSIP so we can have a look-see.

Thanks.

CUSIP 645780FQ5.........Story of my life..While on the phone with my broker someone bought all 45 before he could place the order.

 

[lawman]

If anyone sees a good deal on any short term bonds of any type I would be interested in getting the CUSIP number..

 

[COcheesehead]

The one thing I see is the bond sold below par meaning you would have had to pay cap gains on the difference. I avoid those.

 

[COcheesehead]

Here’s a 1 year 5% coupon 2.46% YTM.
60636SEF7

 

[njhowie]

If anyone sees a good deal on any short term bonds of any type I would be interested in getting the CUSIP number..

I don't have Schwab, but here's a few Fidelity is currently showing. They are taxable, but higher yielding. Some additionally have insurance.

67910HRN2
645913BC7
40727TDB7
6461366Q9
79739GPC4
626905PP2
088632CS1
59335KCL9

 

[lawman]

Thanks for the CUSIP's!

 

[lawman]

okay I just bought CUSIP # 080637JS1..The details page in my account shows a coupon rate of 2.25% but does not show a YTM..That is close to the YTM that was on the issue at the time I purchased. Is that the same?

 

[Rianne]

What are agencies? I notice in the bond section of VG, that there are CDs, Treasuries, and Agencies in the bond section. It says they are government agencies. The interest is higher than anything else. Are they callable?

 

[COcheesehead]

okay I just bought CUSIP # 080637JS1..The details page in my account shows a coupon rate of 2.25% but does not show a YTM..That is close to the YTM that was on the issue at the time I purchased. Is that the same?

Did you just buy 10 at $100.16?

 

[lawman]

Did you just buy 10 at $100.16?

yes

 

[COcheesehead]

yes

Your YTM, yield to maturity, assuming you paid a dollar a bond is 1.98%.

 

[lawman]

Your YTM, yield to maturity, assuming you paid a dollar a bond is 1.98%.

My cost was $10,019.23
Shouldn't my 2 page description that I printed show a YTM?

My confirmation shows a cost of $10,016.10

 

[COcheesehead]

My cost was $10,019.23
Shouldn't my 2 page description that I printed show a YTM?

I use Fidelity. They show the YTM at the time the order is entered which includes the commission. It also then shows the YTM on their bond tracker tool. I am not sure how Schwab does it. Fidelity makes it pretty easy.